NORTH CAROLINA
Volume ID, Issue 15
Pages 1428 - 1 650
NOVEMBER 1, 1995
This issue contains documents officially filed
through October 18, 1995.
Office of Administrative Hearings
Rules Division
424 North Blount Street (27601)
PO Drawer 27447
Raleigh, NC 27611-7447
(919) 733-2678
FAX (919) 733-3462
Julian Mann III, Director
James R. Scarcella Sr., Deputy Director
Molly Masich, Director of APA Services
Ruby Creech, Publications Coordinator
Teresa Kilpatrick, Editorial Assistant
Jean Shirley, Editorial Assistant
IN THIS ISSUE
I. IN ADDITION
Industrial Commission 1428
Voting Rights Act 1429-1431
II. PROPOSED RULES
Agriculture
Plant Industry 1432-1435
Environment, Health, and Natural Resources
Coastal Resources 1552 - 1565
Environmental Management 1515 - 1551
Marine Fisheries 1551 - 1552
Wildlife Resources 1565 .
Human Resources
Medical Assistance 1479-1483
Mental Health, Developmental Disabilities and
Substance Abuse Services 1435 - 1479
Social Services 1483-1489
Insurance
Actuarial Services 1514
Consumer Services 1489 - 1490
Financial Evaluation Division 1503 - 1513
Investigations Division 1490 - 1492
Property and Casualty 1492- 1502
Special Services Division 1513-1514
Licensing Boards
Electrical Contractors 1579-1583
Landscape Architects 1583 - 1584
Public Education
Elementary & Secondary 1565 - 1567
Secretary of State
Corporations Division 1567-1573
Notary Public Division 1578-1579
Securities Division 1575 - 1578
Uniform Commercial Code 1573 - 1575
m. LIST OF RULES CODIFIED 1585-1588
IV. RRC OBJECTIONS 1589-1594
V. CONTESTED CASE DECISIONS
Index to ALJ Decisions 1595-1609
Text of Selected Decisions
94 OSP 0684 1610- 1623
95 CPS 0459 1624- 1627
95 CPS 0540 1628- 1631
95 EDC 0027 1632- 1633
VI. CUMULATIVE INDEX 1635-1650
NORTH CAROLINA REGISTER
Publication Schedule
(July 1995 - November 1995)
Volume
and
Issue
Number
Issue
Date
Last Day
for Filing
Last Day
for Elec-
tronic
Filing
Earliest
Date for
Public
Hearing
15 days
from no-
tice
• End of
Required
Comment
Period
30 days
from
notice
I flst Day
to Submit
toRRC
** FjirUest
Effective
Date
10:7
07/03/95
06/12/95
06/19/95
07/18/95
08/02/95
08/21/95
10/01/95
10:8
07/14/95
06/22/95
06/29/95
07/31/95
08/14/95
08/21/95
10/01/95
10:9
08/01/95
07/11/95
07/18/95
08/16/95
08/31/95
09/20/95
11/01/95
10:10
08/15/95
07/25/95
08/01/95
08/30/95
09/14/95
09/20/95
11/01/95
10:11
09/01/95
08/11/95
08/18/95
09/18/95
10/02/95
10/20/95
12/01/95
10:12
09/15/95
08/24/95
08/31/95
10/02/95
10/16/95
10/20/95
12/01/95
10:13
10/02/95
09/11/95
09/18/95
10/17/95
11/01/95
11/20/95
01/01/96
10:14
10/16/95
09/25/95
10/02/95
10/31/95
11/15/95
11/20/95
01/01/96
10:15
11/01/95
10/11/95
10/18/95
11/16/95
12/01/95
12/20/95
02/01/96
10:16
11/15/95
10/24/95
10/31/95
11/30/95
12/15/95
12/20/95
02/01/96
This table is published as a public service, and the computation of time periods are not to be deemed binding or controlling.
Time is computed according to 26 NCAC 2B .0103 and the Rules of Civil Procedure, Rule 6.
* An agency must accept comments for at least 30 days after the proposed text is published or until the date of any public
hearing, whichever is longer. See G.S. 150B-21.2(f) for adoption procedures.
** The "Earliest Effective Date" is computed assuming that the agency follows the publication schedule below, that the Rules
Review Commission approves the rule at the next calendar month meeting after submission, and that RRC delivers the rule to the
Codifier of Rules five (5) business days before the 1st day of the next calendar month.
Revised 07/95
IN ADDITION
This Section contains public notices that are required to be published in the Register or have been approved by the
Codifier of Rules for publication.
PUBLIC NOTICE OF RULE-MAKING
NORTH CAROLINA INDUSTRIAL COMMISSION
NOnCE IS HEREBY GIVEN that, pursuant to the rule-making authority vested in it by N.C.G.S. § 97-26 and
§ 143-300, the North Carolina Industrial Commission will consider adopting (1) a Revised Medical Fee Schedule, (2)
Revised Rules for Rehabilitation Services, (3) Utilization Review Rules, and (4) Managed Care Rules, all under the
Workers' Compensation Act, to become effective November 30, 1995. The Commission solicits the comments of all
interested persons, firms, and organizations. Copies of all four of the above may be obtained by any interested person by
addressing a request to the address below.
Hie Commission requests written comments on all four of the above. In addition, there will be a public hearing
held on the 16th day and 17th days of November, at 10:00 a.m., in Room 2149, the Utilities Commission Hearing Room,
Dobbs Building, 430 North Salisbury Street, Raleigh, N.C., during which the Commission will hear the verbal comments
of persons scheduled to speak. Those desiring to make an oral presentation, not to exceed 15 minutes in length, should
submit a request on or before November 14, 1995. Speakers at the public hearing are encouraged to prepare a written
summary of remarks for the use of the Commission.
WRITTEN COMMENTS, REQUESTS FOR COPIES OF ANY OR Ali OF THE FOUR AND REQUESTS FOR
ORAL PRESENTATIONS SHOULD BE ADDRESSED TO COMMISSIONER THOMAS J. BOLCH AT 430 NORTH
SAUSBURY STREET, RALEIGH, NC 27611. WRITTEN COMMENTS WILL BE RECEIVED BY THE COMMISSION
UP TO AND INCLUDING NOVEMBER 30, 1995.
This 17th day of October, 1995.
J. Howard Bunn, Jr., Chairman
North Carolina Industrial Commission
10:15 NORTH CAROLINA REGISTER November 1, 1995 1428
IN ADDITION
City of Greenville
North Carolina
City Attorney's Office
P.O. Box 7207
Greenville, NC 27835-7207
Ms. Elizabeth Johnson
Acting Chief
Voting Section, Civil Rights Division
U.S. Department of Justice
P.O. Box 66128
Washington, D.C. 20035-6128
September 28, 1995
RE: Preclearance of Annexation/City of Greenville. N.C.
Dear Ms. Johnson:
In your letter of August 22, 1995, you advised us that the nine annexations submitted to your office by our office on June
23, 1995 had been precleared pursuant to Section 5 of the Voting Rights Act of 1965. As described in your letter, the
ordinance numbers were "94-19, 25, 26, 36, 38, 41, and 45-47," suggesting that all of the ordinances had a prefix number
of "94." In fact, only Ordinance #94-19 had that prefix; the remainder of the ordinances submitted for preclearance had
a prefix of "95." This apparent oversight has resulted in some confusion in our City Clerk's office and in the office of the
local Board of Elections.
Accordingly, please confirm that the ordinance numbers for the annexations that received preclearance, as advised in your
letter of August 22, 1995, are as follows:
Ordinance No. 94-19 (Lot 4, Block A, Park Place and a portion of Hemby Lane)
Ordinance No. 95-25 (Thomas F. Taft property)
Ordinance No. 95-26 (South Square, Phase 3, Lots 1-2)
Ordinance No. 95-36 (Windsor Subdivision, Section 10, Lot 430)
Ordinance No. 95-38 (Portion of Thomas F. Taft property)
Ordinance No. 95-41 (Covengton Downe Subdivision, Lot 24, Block A)
Ordinance No. 95-45 (G. Randy Bailey property)
Ordinance No. 95-46 (Willow Run)
Ordinance No. 95-47 (Windsor Subdivision, Section 9)
If you need any further information or have any questions, please do not hesitate to call me.
With best wishes, 1 am
Sincerely yours,
Robert W. Oast, Jr.
City Attorney
1429 NORTH CAROLINA REGISTER November 1, 1995 10:15
IN ADDITION
City of Greenville
North Carolina
City Attorney's Office
P.O. Box 7207
GreenvUle, NC 27835-7207
Ms. Elizabeth Johnson
Acting Chief
Voting Section, Civil Rights Division
U.S. Department of Justice
P.O. Box 66128
Washington, D.C. 20035-6128
September 29, 1995
RE: Preclearance of Annexation/City of Greenville. N.C.
Dear Ms. Johnson:
This is a follow-up to my letter to you of yesterday, September 28, 1995, wherein I requested clarification regarding
ordinance numbers for 9 annexations with respect to which you had advised us of preclearance under Section 5 of the Voting
Rights Act in a letter dated August 22, 1995. In yesterday's letter, I advised you that only Ordinance #94-19 had the "94"
prefix, and that the remaining 8 ordinances should have had a prefix of "95. " That information is still correct with respect
to all of the ordinances except 94-19.
In my letter to you of June 21, 1995 (copy enclosed), I listed Ordinance #94-19 as one of those with respect to which the
City was requesting preclearance. A review of the ordinances actually submitted for preclearance indicates that Ordinance
#94-19 should be Ordinance #95-19. A certified copy of that ordinance is enclosed for your use. All of the other ordinance
numbers in that submission are correct, but clarification of your August 22, 1995 letter with respect to those ordinance
numbers is stUl necessary.
I apologize if I have added confusion to this already confusing matter. If you have any questions or need any further
information, please give me a call.
With best wishes, I am
Sincerely yours.
Robert W. Oast, Jr.
City Attorney
10:15 NORTH CAROLINA REGISTER November 1, 1995 1430
IN ADDITION
U.S. Department of Justice
Civil Rights Division
DLP;GS:VNN:tlb Voting Section
DJ 166-012-3 P.O. Box 66128
95-1826 Washington, D.C. 20035-6128
October 10, 1995
Robert W. Oast, Jr. Esq.
City Attorney
P.O. Box 7207
Greenville, North Carolina 27835-7207
Dear Mr. Oast:
This refers to your September 28 and 29, 1995, letters concerning the submission under Section 5 of the Voting
Rights Act, 42 U.S.C. 1973c, of nine annexations (ordinance Nos. 95-19, 25, 26, 36, 38, 41, and 45 to 47) and their
designation to districts of the City of Greenville in Pitt County, North Carolina.
We have reviewed our records and it appears that our August 22, 1995, letter contained a typographical error in
that it stated the incorrect year. Please be advised that our records show that on August 22, 1995, Section 5 preclearance
was granted to the above-referenced changes. We apologize for any inconvenience we may have caused you in this matter.
Sincerely,
Deval L. Patrick
Assistant Attorney General
Civil Rights Division
By:
Elizabeth Johnson
Acting Chief, Voting Section
1431 NORTH CAROLINA REGISTER November 1, 1995 10:15
PROPOSED RULES
TITLE 2 - DEPARTMENT OF AGRICULTURE
Notice is hereby given in accordance with G.S.
150B-21.2 that the North Carolina Board of Agricul-
ture intends to amend rules cited as 2 NCAC 48A .1702;
52B .0207, .0212, .0302; 52C .0105 and adopt 2 NCAC
48C .0029.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conducted at 10:00 a.m. on
December 7, 1995 at Gov. James B. Hunt, Jr. Horse
Complex (Restaurant), 4601 Trinity Rd. , Raleigh, NC
27607.
Reason for Proposed Action:
2 NCAC 48A .1702 - To add the MUe-a-Minute plant to the
official list of noxious weeds, in order to provide for the
regulation and control.
2 NCAC 48C .0029 - To require the variety to be stated on
the label for certain kinds of seed, in order to protect buyers
of seed.
2 NCAC 52B .0207 - To establish requirements for importa-
tion of "sporting swine" into North Carolina, in order to
prevent the introduction and spread of swine diseases and to
modify pseudorabies program requirements for importation
of all breeding swine.
2 NCAC 528 .0212 - To add the Brushtail Possum to the
list of animals for which a permit is requested prior to
importation, in order to prevent the introduction and spread
of animal diseases.
2 NCAC 52 B .0302 - To require "sporting swine" offered
for sale within the state to originate from a validated
brucellosis-free herd, in order to prevent the spread of
brucellosis in swine.
2 NCAC 52C .0105 - To require "sporting swine" offered
for sale within the state to originate from a qualified
pseudorabies-negative herd, in order to prevent the spread
of pseudorabies among swine and to modify pseudorabies
program requirements for movement of all feeding and
breeding swine within the state.
Comment Procedures: Interested persons may present their
statements either orally or in writing at the public hearing
or in writing prior to the hearing by mail addressed to
David S. McLeod, Secretary of the North Carolina Board of
Agriculture, P.O. Box 27647, Raleigh, NC 27611.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government funds.
CHAPTER 48 - PLANT INDUSTRY
SUBCHAPTER 48A - PLANT PROTECTION
SECTION .1700 - STATE NOXIOUS WEEDS
.1702 NOXIOUS WEEDS
(a) Class A Noxious Weeds. The North Carolina Board
of Agriculture hereby establishes the following list of Class
A Noxious Weeds:
(1) All weeds listed in 7 C.F.R. 360.200 which is
hereby incorporated by reference including
subsequent amendments and editions. Copies of
the Code of Federal Regulations may be ob-
tained from the Superintendent of Documents,
Government Printing Office, Washington, DC
20402, at a cost of twelve dollars ($12.00);
(2) Elodea, African ~ Lagarosiphon spp. (all spe-
cies);
(3) Fern, Water ~ Salvinia spp. (all except S.
rotundifolia);
(4) Mile-a-Minute ;; Polygonum perfoliatum:
(^ £5} Stonecrop, Swamp — Crassula helmsii;
(5) £6} Water-chestnut — Trapa spp.
(b) Class B Noxious Weeds. The North Carolina Board
of Agriculture hereby establishes the following list of Class
B Noxious Weeds:
(1) Betony, Florida—Stachys floridana Shuttlew.;
(2) Fieldcress, Yellow— Rorippa sylvestris (L.)
Bess.;
(3) Lythrum — Any Lythrum species not native to
North Carolina;
(4) Puncturevine— Tribulus terrestris L.;
(5) Thistle, Canada—Cirsium arvense (L.) Scop.;
(6) Thistle, Musk—Carduus nutans L.;
(7) Thistle, Plumeless— Carduus acanthoides L.;
(8) Watermilfoil, Eurasian — Myriophyllum
spicatum L. ;
(9) Waterprimrose, Uruguay — Ludwigia
uruguayensis (Camb.) Kara.
(c) Class C Noxious Weeds. The North Carolina Board
of Agriculture hereby establishes the following list of Class
C Noxious Weeds: none.
Statutory Authority G.S. 106-420.
SUBCHAPTER 48C - SEEDS
.0029 VARIETY LABELING
The variety name shall be stated on the seed analysis label
for the following kinds of seed:
(1) cotton;
(2) field com;
(3) peanuts:
(4) soybeans;
(5) tobacco; and
(6) wheat.
Statutory Authority G.S. 106-277.15.
CHAPTER 52 - VETERINARY DIVISION
SUBCHAPTER 52B - ANIMAL DISEASE
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1432
PROPOSED RULES
SECTION .0200 - ADNUSSION OF
LIVESTOCK TO NORTH CAROLINA
.0207 IMPORTATION REQUIREMENTS:
SWINE
(a) All swine imported into the state, except by special
permit or for immediate slaughter, shall be accompanied by
an official health certificate issued by a state, federal, or
accredited veterinarian stating that they are free from any
signs of an infectious or communicable disease and are not
known to have been exposed to same. The health certificate
shall contain the ear tag number of each animal or other
identification acceptable to the State Veterinarian. Swine
imported for feeding or breeding purposes shall be moved
in clean and disinfected trucks or other conveyances.
(b) Breeding swine shall originate from a "Validated
Brucellosis-Free" herd or a "Validated Brucellosis-Free"
State and originate from a "Qualified Pseudora-
bies-Negative" h*fd herd, Qualified-Negative Gene- Altered
Vaccinated Herd (QNV) or Pseudorabies Stage IV or V
(Free) State as defined in Title 9, Parts 78.1 and 85 of the
Codo of Fadoral Rogulaliono. Parts 7 8 . 1 and 8 5 of Titl e 9
of th e Code of Fodoral R e gulationo ar e h e r e by adoptod by
rcfcronce, including subsequ e nt amendments. — Copios of the
Codo of Fodoral Regulations may bo obtained from tho
Gov o mment Printing Offioo, Waohington, B.C., at a ooot
determin e d by that offic e.
(c) All feeder swine imported into the state shall be
accompanied by an official health certificate issued by a
state, federal or accredited veterinarian stating that:
(1) No pseudorabies vaccine has been used in the
herd of origin, unless the herd is a pseudorabies
Controlled Vaccinated herd as defined in Title 9,
Part 8 5. 1 of tho Code of F e d e ral R e gulations, or
a poeudorabi e o monitored vaccinated herd; and
(2) The swine were tested and found negative for
pseudorabies within 30 days prior to importa-
tion; or
(3) The swine originated from a pseudorabies-free
area as determined by the State Veterinarian; or
(4) The swine originated firom a Qualified Pseudora-
bies Negative Herd as d e fin e d in Titl e 9, Part 8 5
of th e Cod e of Federal Regulationo ; or
(5) The swine originated from a monitored feeder
pig herd. For the purp>oses of this Rule, in
ord e r to qualify' aa a monitored feeder pig h e rd,
t e sting must have boon p e rformed in aooordanoe -
with the following standards:
(A) — In herds of ton or fewer brooding swine, all
brooding owin e must t e st n e gativ e within 12
months prior to importation.
fB) — In herds of 1 1 — to 35 breeding swine, — tea
randomly selected breeding animals, (to in
elud e giltii. sows and boars) must t e et n e gativ e
within 12 months prior to importation.
(C^ — In herds of more than 35 breeding swine,
either 30 or 30 percent of tho total herd.
whiobovor is looa, randomly soloctod brooding
ffi lto, BOWS and boaro muot toot negative within
12 months prior to importation.
(©) — All brooding gilto, sows and booro in a herd
shall bo subject to random selection for testing.
(E) — T e sting must b e done by us e of an official
po e udorabioo toot, as d e fin e d in Titl e 9, Port
8 5 of the Codo of Fodoral Regulations.
(d) Healthy swine for feeding purposes may move directly
from a farm of origin in a contiguous state on which they
have been located for not less than 30 days to a livestock
market or stockyard in North Carolina that has been
state-federal approved for handling feeder swine, without the
health certificate required herein, provided such swine are
accompanied by proof of the pseudorabies status of the herd
of origin acceptable to the State Veterinarian. Such swine
shall be inspected by a state or federal inspector or approved
accredited veterinarian prior to sale at the market.
(e) Healthy swine may be shipped into the state for
immediate slaughter without a health certificate provided
they go directly to a slaughtering establishment approved by
the State Veterinarian, or to a state-federal approved
livestock market or stockyard for sale to an approved
slaughtering establishment for immediate slaughter only.
(f) j\fl uflod in Paragraph (c)(1) of thio Rulo, a "monitorod
vaooinatod herd" moono a h e rd in which all brooding swine
ov e r six months of ag e have boon officially vaooinatod by on
accredited vetorirutrian s ^ 'ith a vaocine tho titers of which can
bo distinguished from psoudorabios fiold infections and tho
h e rd hac paoo e d an official random sampl e toot or complete
herd toot during th e pr e c e ding 12 months. — (From propoood
Pseudorabies Emdication Uniform Methods and Rules of tho
United States Department of Agriculture.)
(f) Sporting swine:
(1) For purposes of this Rule:
(A) "Sporting swine" means any domestic or feral
swine intended for hunting purposes and in-
cludes the progeny of these swine whether or
not the progeny are intended for hunting
purposes;
(B) "Feral swine" means any swine that have lived
any part of its life free roaming.
(2) No person shall import sporting swine into
North Carolina unless:
(A) The swine have not been fed garbage within
their lifetime; and the herd of origin is vali-
dated brucellosis free and qualified pseudora-
bies negative; and
CB) The swine have not been members of a herd of
swine known to be infected with brucellosis or
pseudorabies within the previous 12 months;
and
The individual animals six months of
im
im
or
over have a negative brucellosis and pseudora-
bies test within 30 days of movement; and
The swine have not been a part of a feral
swine population or been exposed to swine
1433
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
captured from a feral swine population within
the previous 12 months: and
CE) The swine are accompanied by an official
health certificate or certificate of veterinary
inspection identifying each animal by ear tag,
breed, age, sex, the state of origin, and certi-
fying that the swine meet the import require-
ments of North Carolina.
Note: Violation of this Rule is a misdemeanor under G.S.
106-307.6, which provides for a five hundred dollar
($500.00) fine, six months' imprisonment, or both.
Statutory Authority G.S. 106-307.5; 106-316.1; 106-317;
106-318.
.0212 IMPORTATION REQUIREMENTS:
WILD ANIMALS
(a) A person shall obtain a permit from the State Veteri-
narian before importing any of the following animals into
this State:
(1) Skunk;
(2) Fox;
(3) Raccoon;
(4) Ringtail;
(5) Bobcat;
(6) Coyote;
(7) Morten. Marten:
(8) Brushtail Possum (Trichosurus vulpecula").
(b) Permits for the importation into this State of any of
the animals listed in (a) of this Rule shall be issued only if
the animal(s) will be used in a research institute inotitut e , or
for public display or organized entertainment as in zoos or
circuses.
(c) Llamas, all cervidae, bioon bison, and all other
bovidae other than domestic cattle may be imported into the
State if accompanied by an official health certificate issued
by an accredited veterinarian which states that:
(1) all animals six months of age or older have
tested negative for brucellosis within 30 days
prior to importation; and
(2) all animals six months of age or older have
tested negative for tuberculosis within 60 days
prior to importation pursuant to the guidelines of
the United States Department of Agriculture
Veterinary Services Notice dated December 31,
1990, which states "the cervical test for cervidae
is the intradermic injection of 0.1 ml. of U. S.
Department of Agriculture (USDA) contract
PPD Bovis tuberculin in the midcervical region
with reading by observation and palpation at 72
hours, plus or minus 6 hours"; and
(3) the herd of origin has had no brucellosis or
tuberculosis diagnosed within the past 12
months.
(d) Other wild and semi-wild animals, under domestica-
tion or in custody may be imported into this state State.
provided that a report of the number of animals by species
is made to the State Veterinarian within 96 hours after entry
into the otate, State and that an immediate opportunity for
examination to determine the health status of such animal s
is afforded the State Veterinarian or his authorized represen-
tative.
Statutory Authority G.S. 106-317; 106-400.
SECTION .0300 - BRUCELLOSIS
REGULATIONS
.0302 BRUCELLOSIS REQUIREMENTS
FOR SALE OF CATTLE AND SWINE
(a) All cattle offered for public sale must test negative for
brucellosis within 30 days preceding the date of sale except
those cattle listed as follows:
(1) cattle sold for immediate slaughter;
(2) native heifers and bulls less than 18 months of
age;
(3) steers and spayed heifers;
(4) officially brucellosis vaccinated heifers of the
dairy breeds imder 20 months of age (provided
that all officially brucellosis vaccinated heifers
of any breed that are parturient or post parturi-
ent must be tested and negative for brucellosis);
(5) officially brucellosis vaccinated heifers of the
beef breeds imder 24 months of age (provided
that all officially brucellosis vaccinated heifers
of any breed that are parturient or post parturi-
ent must be tested and negative for brucellosis);
(6) cattle originating directly from a certified brucel-
losis-free herd;
(7) heifers under 12 months of age purchased for
feeding purposes; at the discretion of the State
Veterinarian, buyers of feeder heifers under 12
months of age may be required, before they
remove such cattle from place of purchase, to
sign a statement of intent to feed those cattle not
tested for brucellosis in isolation from breeding
animals. Willful failure of a buyer of such
cattle to sign a statement of intent when re-
quested by the State Veterinarian or his autho-
rized representative or willful failure to comply
with such a signed statement of intent is a
violation of this Section.
(b) All swine sold or offered for sale for breeding
purposes must originate directly from a validated brucello-
sis-free herd unless they originate from a state classified as
swine-brucellosis free.
(c) Sporting swine:
(1) For the purpose of this Rule:
(A) "Sporting swine" means any domestic or feral
swine intended for hunting purposes and in-
cludes the progeny of these swine whether or
not the progeny are intended for hunting
purposes:
(B) "Feral swine" means any swine that have lived
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1434
PROPOSED RULES
any part of its life free roaming.
(2) All sporting swine sold or offered for sale must
originate directly from a validated brucellosis-
free herd.
Statutory Authority G.S. 106-389; 106-396.
SUBCHAPTER 52C - CONTROL OF
LIVESTOCK DISEASES: MISCELLANEOUS
PROVISIONS
SECTION .0100 - DISEASED AND DEAD
ANIMALS
.0105 PSEUDORABIES STATUS AND
TESTEVG
(a) Feeding and breeding swine may not be transported on
any public road or held in any public place unless accompa-
nied by a written permit from the State Veterinarian or
proof satisfactory to the State Veterinarian that:
(1) No pseudorabies vaccine has been used in the
herd of origin, unless the herd is a pseudorabies
Controll e d Vaooinat e d h e rd as d e fin e d in Titl e 9.
Part 85. 1 of the Code of Federal Rogulations, or
a psoudorabios monitored vaccinated herd or
unless the use of vaccine has been approved
under the North Carolina Pseudorabies Program;
and
(2) The swine were tested and found negative for
pseudorabies within 30 days prior to movement;
or
(3) The swine originated from a pseudorabies-free
area as determined by the State Veterinarian; or
(4) The swine originated from a Qualified Pseudora-
bies Negative Herd as defined in Title 9, Part 85
of the Code of Federal Regulations; or
(5) The swine originated from a monitored feeder
pig herd; or h e rd. — For the purposes of this
Rule, in ord e r to qualify' as a monitored feeder
pig herd, testing must have boon porformod ia
accordanoc with the following stimdords:
(A^ — In h e rds of ton or fewer breeding swin e , all
breeding owine must t e st n e gativ e within 12
months prior to movement.
(B) — In herds of 1 1 to 35 brooding swino, ton
randomly s e lect e d breeding animals, (to in
elud e gilts, sows and boars) must t e st n e gativ e
within 12 months prior to movement.
fG^) — In herds of more than 35 brooding swine.
e ith e r 30 or 30 p e rcent of the total h e rd,
which e v e r is l e ss, randomly oeleoted breeding
gilts, sows and boars must tost negative within
12 months prior to movement.
(©^ — All brooding gilts, cows and boars in a herd
shall be subj e ct to rtmdom selection for t e sting.
(E) — Testing must bo done by use of an offioial
pseudorabies test, as dofmod in Title 9, Part
8 5 of the Code of Fodoral Rogulationo; Of
(6) The swine are being transjwrted or held in
accordance with the North Carolina Pseudora-
bies Program.
(b) The State Veterinarian or his representative is autho-
rized to test swine for pseudorabies in accordance with G.S.
106-400.1.
(c) Swine transported on a public road or held in a public
place in violation of this Rule are subject to quarantine and
may be transported or held only by written permit from the
State Veterinarian or his representative.
{4) — As usod in Paragraph (aXl) hereof, a "monitored
vaocirmtod herd" moons a herd in which all brooding swino
o' i ' e r six months of ago have boon officially vaooinat e d by an
aooredited veterinarian with a vaooin e th e titers of which oan
bo distinguished from psoudorabios Field infoctiono and the
herd has {xisscd an official random sample tost or oomploto
h e rd test during th e pr e c e ding 12 months. — (From proposed
Po e udombios Eradication Uniform Motbodo and Ruloo of tho
United Statos Dopartmont of Agrioulturo.)
(d) Sporting swine:
m
(A}
mi
m
For the purpose of this Rule:
"Sporting swine" means any domestic or feral
swine intended for hunting purposes and in-
cludes the progeny of these swine whether or
not the progeny are intended for hunting
purposes;
"Feral swine" means any swine that have lived
any part of its life free roaming .
All sporting swine sold or offered for sale must
originate directly from a qualified pseudorabies-
negative herd.
Note: Violation of this regulation is a misdemeanor under
G.S. 106-22(3), and is punishable by fme or imprisonment
of not more than two years, or both.
Statutory Authority G.S. 106-22(3); 106-400.1.
TITLE 10 - DEPARTMENT OF HUMAN
RESOURCES
Notice is hereby given in accordance with G.S.
150B-21.2 that the Director of the Division of Mental
Health, Developmental Disabilities and Substance Abuse
Services intends to adopt rules cited as 10 NCAC 14C . 1015
- . 1018. . 1149 - . 1160, amend rules cited as 10 NCAC 14C
.1001 - .1002, .1004- .1006, .1010- .1014, .1101 - .1102,
.1114. .1123, .1133 - .1137, .1140. .1148; 14D .0006 and
repeal rules cited as 10 NCAC 14C .1003, .1008. .1103 -
.1105, .1107, .1110- .1111, .1115 - .1121, .1125 - .1131.
.1138- .1139, .1141 - .1147.
Proposed Effective Date: February 1 , 1996.
Instructions on How to Demand a Public Hearing (must
be requested in writing within 15 days of notice): Any
1435
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
individual who wishes to demand a public hearing should
contact Charlotte Tucker, Division of Mental Health,
Developmental Disabilities and Substance Abuse Services,
325 N. Salisbury Street, Raleigh, NC 27603, (919-733-4774)
within 15 days of this Notice.
Reason for Proposed Action: The statewide implementa-
tion of the Pioneer Funding System and the Division 's move
away from categorical funding sources has resulted in the
necessity for a complete rules revision regarding accounting
procedures for area programs and contract agencies.
Comment Procedures: Any interested person may submit
written comments and state the Rules to which the comments
are addressed. These comments will be accepted through
December 1, 1995.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government funds.
CHAPTER 14 - MENTAL HEALTH: GENERAL
SUBCHAPTER 14C - GENERAL RULES
SECTION .1000 - ACCOUNTING STANDARDS
FOR ALL RECIPIENTS OF FUNDS
ADMINISTERED BY THE DIVISION
.1001 EFFECT OF THIS SECTION
The requirements of this Section shall apply to all area
programs and their subrecipient agencies receiving funds
administered by the Division and discussed in Section . 1 100
of this Subchapter.
Statutory Authority G.S. 122C- 147.1.
.1002 MEMORANDUM OF AGREEMENT
AND ANNUAL SERVICE PLAN
(a) An annual plan and budgot s hall bo required from oroa
programs befor e any stat e or f e d e ral fund s administ e r e d by
th e Division mny b e allooat e d to an ar e a program. — Suoh
annual plan and budgot shall bo in accordanco with Chapter
159 of the Gonoral Statutes. The area program shall
develop and maintain their annual budget in accordance with
G.S. 159.
(b) Tho annual plan and budgot of an area program shall
bo approved by the area board and oignod by the aroa board
chairman. The area program shall prepare and submit to
the Division the annual service plan and Memorandum of
Agreement in accordance with G.S. 122C-143.2. Detailed
instructions are issued annually by the Division.
Statutory Authority G.S. 122C-112; 122C-143.2; 122C-
144.1.
.1003 BUDGET FORM
(a) — Th e annual budg e t shall b e on a standard form
available from tho fiscal sorviooo ooction of tho Division.
Qet) — Th e otondord form oholl require information on the
ootimatod oxpondituroo and revenu e of the area programo.
On an annual basis tho Divi s ion Director will iasuo inatnic
tions which apooify tho roquirod infonnatioa.
Statutory Authority G.S. 143B-10.
.1004 REPORTS REQUIRED
(a^ — iMl programs r e c e iving funds administ e red by th e
Division shall submit quarterly roporto of roooipts and
oxponditufos to tho Division.
(b) — Suoh quarterly reports shall bo s ubmitted on a
standard form availabl e from tho Fisoal s « r>'io e o section of
th e Division. — Other formats may b e used if approved by tho
Division.
(c) Suoh standard form or format shall require a otatomont
of roooipts — and e xp e nditures by major t)'peo of funds
r e c e iv e d and e xp e nd e d during th e quart e r report e d on and
during tho fiscal year to date. — Tho amount of suoh roooipts
or oxpondituros s hall bo compared to tho annual budgot and
th e amount of unrealized r e c e ipts and unexp e nd e d expondi
tur e lin e it e ms shall be indicat e d.
(d) Such standard forms or foi'uiat shall bo signed by tho
area director and fiscal officor.
( e ) Quart e rly r e ports ar e to be filed no lat e r than the 15th
of th e month following th e quart e r b e ing r e ported upon.
Exceptions may bo made to this date for justifiable roasons.
The Secretary may require reports in accordance with
G.S. 122C-144.1.
Statutory Authority G.S. 122C-112; 122C-144.1.
.1005 ANNUAL AUDIT REPORT
Each program receiving funds administered by the
Division shall submit an annual audit audit e d financial
statomonts in accordance with requirements of G.S.
122C 132, 122C 1 4 3, G.S. 159-34 and the Local Govern-
ment Commission. Commisoion by th e date indicated on the
approv e d aud i t oontroot or th e date indicated on the amended
audit contract.
Statutory Authority G.S. 122C-112; 122C-144.1; 159-34.
.1006 BUDGET REVISIONS
(a) No revision of tho budgot as doscribod in this Section
or transf e r of funds from a cost center stat e d on th e budgot
to anoth e r cost c e nt e r shall be mad e without th e prior
approval of tho area board. Tho aroa board may authorize
tho aroa program budgot officer to transfer money s from
on e lin e it e m of e xp e nditur e to anoth e r within th e sam e cost
center as Uotod on th e approv e d budget ordinanc e subj e ct to
written limitations and proooduros tho aroa board proscribes.
All such tronsfora shall bo reported to tho aroa board at its
next regular meeting and shall b e e nter e d in tho minut e s.
An information copy of all locally approv e d budg e t r e visions
shall bo forv i 'ardod to tho appropriate regional office of tho
Division to tho attention of tho regional accountant. — Area
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November 1, 1995
1436
PROPOSED RULES
programs shall vorif>' that any tronafor of funds is in
oomplionoo with the Divioion'o oooounting rul ee in this
Sootion and Sootiop . 1 100 of thio Subchapter and Rul e .0006
in 10 NCAC 11D and G.S. 122C 143. — The following
budget revisions shall bo approved by tho regional ofFioo:
f4^ any budget revioion within a oost o e nt e r or
boP i i i eon ooot c a nters whioh would caus e division
funds to bo transferred from one disability area
to another or from one categorical — fund to
another; and
(S^ any budget r e vision ' ■ ' I 'hioh ohong e o client oor
vices OS approved in tho annual plan and budget.
(b) Tho Division shall monitor for budgetary complianco
of exp e nditur e e at th e cost center total l e v e l.
(o) Tho area program budg e t revisions shall b e on a forra
prescribed by the Division.
(d) Approved rovisions or transfers shall bo reflected in
tho n e xt quart e rly report of th e ar e a program. — If th e
revision aff e cts funds for Titl e XX of th e Social S e ourit)'
Act. 4 2 U.S.C. 13 9 7 through 13Q7(f). the next monthly
request for roimbursomont shall reflect tho revision. Caro
shall b e tak e n to assur e that budg e t r e visions or e mad e
timely for Title XX b e caus e th e Division will not honor
monthly request — for payments — for v i hich tho apprc'ed
budget docs not agroo with request for payment.
(e) — The need for e ach budg e t revision shall b e justifi e d
briefly and explicitly on th e aomo form ao th e budg e t
revision, if space f)ormit »: — If space doos not permi tT-a
separate form shall bo attached.
(f) Budget reviaionii whioh roduoo oalarieo and wag e e and
fring e benefits b e caus e of vacant positions shall includ e in
tho justification a statement explaining how tho current coat
for which tho lapsed salaries are to be used are to bo
supfwrt e d in oubooquent y e ars. — Laps e d salari e s and wages
shall not bo transf e rr e d to oth e r lin e items sol e ly to e xp e nd
tho budget, to stockpile commoditiee or to roplaco existing
equipment unless tho existing oquipmont con no longer moot
tho program ncodo for v . 'hich it v i 'as purchas e d.
(g) i\r e a programs which contract with privat e or public
sor i 'icc providers on any basi s other than a unit cost basis,
fixed rote basis, or fee for 6er . 'ice basis shall utilize a policy
for budg e t r e visions no l e es string e nt than the revision
policy that th e Division applies to th e ar e a program. Th e
area board shall at its discretion allow the area director to
approve budget rovisions from contractors. — It shall bo
neceoGar)' for th e area board to incorporat e in tho minutes of
a board mooting that th e ar e a dir e ctor has authority' to
approve budget rovisions from contractors.
(h) Tho Kvision shall not participate in any expenditures
not in acoordano e with an approv e d budg e t.
^ — Th e ar e a program shall oonsult with th e appropriat e
regional office of tho Division for any needed clarification
or assistance.
Revisions to the budget must be in accordance with G.S.
159-15.
Statutory Authority G.S. 159-15.
.1008 INVOICES
Invoices us e d to bill for o e rvio e o r e od e rod by area pro
grame shall bo on a ntondord formi — Suoh form invoio e ohall
require such information as namo and address of purchaoof ,
invoioe date and numbor, doooription of sorviooe rwidorod
and amount of invoio e .
Statutory Authority G.S. 122C-112; 122C-147.
.1010 CO^^TRACT REQUIREMENTS
FOR AREA PROGRAMS
(a) This Rule applies to all contracts between an area
program (hereafter referred to as "contractor") and contract
providers (hereafter referred to as "contractees"). For
purposes of this Rule, contractees include:
(1) an individual with whom a contract is made for
professional services, including consultants and
guest speakers; and
(2) an ag e ncy agency, other than another area
program, with whom a contract is made for the
provision of services to one or more clients.
(b) The basis for the relationship between the contractor
and the for-profit or non-profit contractee is the written
contract. All mutual understandings and expectations shall
be clearly stated in the contract. Contracts botwoon a
contractor and a profit or non profit oontraotoo, All
contracts for provision of services to clients, shall contain,
at a minimum, the following provisions as indicated in this
Rule. — Minimum requiromonts for all oontracts shall bo:
Rule, except that Subparagraphs (b'Xll) and (b) (IS) of this
Rule shall not apply to contracts with individuals:
(1) names of the contracting parties;
(2) beginning and ending dates of the contract
period; however, no contract shall extend be-
yond the fiscal y e ar; years, except as allowed by
G.S. 159;
(3) detailed description of the services to be pro-
vided and the expectations of the parties;
(4) amount and method of payment;
(5) address and social security number or IRS
identification number of contractee;
(6) the following statement when a contract period
is greater than 30 days: "This contract may be
terminated at any time upon mutual consent of
both parties or 30 days after one of the contract-
ing parties gives notice of termination;"
(7) a statement which indicates that the contract may
be terminated immediately with cause upon
written notice to the other party; the cause shall
be documented in writing to the other party
detailing the grounds for termination; and if
applicable, the contract may contain a provision
indicating method of payment of liquidated
damages uf>on such termination;
(8) a clause which indicates that the contractor
(area) is held harmless from acts committed by
the contractee;
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NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
(9) signature of each party to the contract; and
(10) a pre-audit statement in accordance with G.S.
159 2 8 . 159-28;
(o) Additional roquiromonto wh e n oontmoting with a profit
or non profit oontraotoo shall bo oo followo:
(11) fi^ either a Division approved unit cost baais or
the total coot basis (lino item budget) shall bo
utilized; a statement specifying the procedure for
budget revisions, if applicable, and provisions
for fund balance; and a statement which in
cludoo!
(12) (A) the procedure for resolving disagreement
between the contracting parties;
(13) (^ for total ooot oontracto, for equipment pur-
chased with non unit cost reimbursement funds,
such as start up or special purpose funding, title
to assets purchased under the contract in whole
or in part rests with the contractor so long as
that party continues to provide the services
which were supported by the contract; if such
services are discontinued, disposition of the
assets shall occur as approved by the Division;
(14) (€) client records of the contractee shall be
accessible for review for the purpose of monitor-
ing services rendered, financial audits of third
party payors, research and evaluation;
(15) (©) upon request, the contractee shall provide
data about individual clients for research and
study to the contractor;
(16) (E) the contractor requirement to provide to the
contractee all pertinent rules, regulations, stan-
dards and other information distributed by the
Division necessary for the performance of the
contractor under the terms of the contract;
(17) (F) the contractor requirement to monitor the
contract to assure compliance with rules of the
Commission, the Secretary and G.S. 122C-142;
(18) (G) a copy of the independent audit referenced
in Subparagraph (e){4) (b)(20) of this Rule, if
required, shall be forwarded to the Office of the
State Auditor at 300 North Salisbury Street,
Raleigh, North Carolina 27603-5903.
(19) (3) provisions which outline the responsibility of
the contractee for the adoption, assessment,
collection and disposition of fees in accordance
with G.S. 122C-146;
(20) ^ a requirement that the contractee shall make
available to the contractor its accounting records
for the purpwse of audit by State authorities and
that the party will, when required by general
statute or in accordance with APSM 75-1,
Section 4.2, have an annual audit by an inde-
[jendent certified public accountant.
(c) Agreements with another area program for provision
of services to clients shall be incorporated into the annual
Memorandum of A greement referenced in Rule .1002 of
this Section.
Statutory Authority G.S. 122C-112; 122C-141; 122C-142;
122C-146; 159-40; 143-6. 1.
.1011 FUND ROUTING
Except as authorized by the General Assemblv:
(1) (a^ all All oommunity r e lat e d stat e and f e deral
funds allocated by the Division for the operation
provision of community aduk mental health, child
m e ntal h e alth, m e ntal r e tardation, aloohol and
drug abuo e program e developmental disability and
substance abuse services shall be allocated to
through the area program, program unloos other
wio e requir e d by the grantor of ouoh funds to the
Division.
(2) (b) Programs providing mental hoolth, mental
rotxirdation and oubotanoo abuse oervioos which
oer i 'e mor e than one oatohm e nt ar e a and are not
imd e r a looal mental h e alth authority' may r e o e ivo
oommunity funds directly from the Division, the
Division mav allocate and contract directly for the
provision of non-treatment activities including but
not limited to administration, training and preven-
tion.
Statutory Authority G.S. 122C-112; 122C-147.1;122C-131.
.1012 DENIAL, DELAY OR REDUCTION
OF PAYMENTS
Th e flow of funds under any of the funding programs
dioousood in Sootion .1100 of this Subchapt e r shall, oo
determined by the Division Director, bo delayed or cancolod
to programs which do not timely make all reports required
by this S e ction. The Division may delay, reduce or deny
pavments to area programs in accordance with G.S. 122C-
151.
Statutory Authority G.S. 122C-151.
.1013 RECOVERY OF DIVISION FUNDS IN
NON-COMPLLVNCE SITUATIONS
(a) The Division shall review all non-compliance situa-
tions occurring in area programs to determine if division
funds were involved in the non-compliance situations.
Non-compliance situations are those situations or actions that
occur which are not in accordance with division, depart-
ment, state, and federal rules, policies, regulations, or
statutes.
(b) The basis for determining if division funds wore
involv e d in th e out of oompliano e situation shall bo the
Division's effective rate of participation, if any, in the
situation, shall be determined in accordance with Section 20
of Volume IV of the Pioneer Funding System Operating
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1438
PROPOSED RULES
Manual.
{^ Tho off e otiv e rat e of division participation for
aroa matching oupported ooot ohall bo determin ed
on on individual cost contor basis by dividing tho
aroa matching funds allocatod for tho )'oar by tho
total budgeted exp e ndituroo inoludod in that ooot
o e nt e r.
(3) TTic offootivo rato of division participation for
tho division's catogorical funds shall bo dotor
min e d by dividing th e oat e gorioal fund p e r ooet
c e nt e r involved by the total budg e t e d e xp e ndi
turog in tho coot oontor or cost contors Lnvolvod.
(c) Division participation in non-compliance situations
shall be recovered through receipt of a check or by reducing
the current year's allooation of payment of allocated division
funds otherwise due the area program . Tho Regional
Director shall notify' tho Director of tho aroa program of the
propo se d re > duotion and th e r e aoono for tho reduction on a
standard form to bo provided by the fiocal o e r < 'io e o oeotion
of tho Division. — Throo oomplotod copies of this form shall
bo sent to tho Division's chiof of Fiscal sorvicoe by tho
R e gional Director so that neoeooar)' accounting e ntrioo to
r e fl e ct th e r e duction con b e record e d in th e Division's
accounting rocorda if no app>oal is Filed in accordanco with
(f) of this Rule. — If tho Division's allocation for tho Fiscal
y e ar has already boon dmv . Ti dov i Ti wh e n th e non complianc e
situation b e com e s known, th e The area program shall
reimburse the Division within 60 days of being invoiced or
notified of the required payback, unless notiFication of
appeal is rendered by the Area Authority .
(d^ — If, for th e Fiscal y e ar in which th e non complianc e
situation occurred, the offoctivo participation rate at tho ond
of tho Fiscal year basod on actual annual expenditures is
diff e rent than the rat e us e d at th e tim e of th e r e duction of
division funds, an adjustment shall be made to r e fl e ct th e
increased amount duo to tho Division or to credit tho amount
overpaid by tho area program against any amount duo. — H
no amount is du e from the area program V i hioh con b e
cr e dit e d with the ov e rpniymont, the Division shall r e fund th e
overpayment from available funds within tho operating
budget p>onding any nocessar>' approval required by tho
Division of Stat e Budg e t.
( e ) I'Vny non complianc e amount d e t e rmined at th e e nd of
the Fiscal year in tho Division' s tentative settlement report
s hall bo handled in a mannor consistent with (b)(1) and
(b)(3) of this Rule.
(d) (f) If the Director of the area program disagrees with
the non-compliance decision, thea within 60 days of receipt
of the notiFication of non-compliance, the Director of the
area program shaii may send to the Division Director a
request for appeal pursuant to G.S. 122C-145, 122C \A1
and 10 NCAC IK .0900 (DHR Administrative Standards).
(e) (g) Pending the final agency decision on the appeal of
the non-compliance decision, the Division shall not with-
draw or reduce the amount of funds due the area program.
Statutory Authority G.S. 122C-112; 122C-147.
.1014 EXPENDITURE OF DIVISION FUNDS
SETTLED ON AN EXPENDITURE BASIS
(a) The Division shall allow area programs to may budget
division catogorical funds within cost centers that also
include, but are not limited to, local funds, aroa matching
funds, federal funds or other division oategorioal funds.
When area programs elect to budget division oat e gorioal
fiinds within a cost center that is settled on an expenditure
basis with such other funds, funds shall be considered to
have been expended in the following order: th e Division
shall oonflid e r th e Division oategorioal funds to b e exp e nd e d
under tho following criteria:
fi) For area program op > oratod oor i 'ioos!
(1) (A) special grants from non-divisional sources
that are for reimbursement of the same expendi-
tures as those for which divisional categorical
funds are appropriated (examples are grants
from R.J. R e ynolds , the Department of Public
Instruction or Division of Youth Services -
Community-Based Alternative Funds);
(2) (B) block grant funds federal funds from the
Division; and
(3) (G) state oat e gorioal funds from the Division.
Revenue from non-divisional sources and block
grant funds shall be deducted from total cost
center expenditures for the purpose of determin-
ing the net cost upon which the state oat e gorioal
share is based. Client-earned income, such as
payments received from patients or third parties
(insurance, Medicare, Medicaid), which is
received but not expended shall be retained by
the area program, or tho contract program and
bo UBod to further tho objoctivoa of tho logisla
tion establishing the stat e oat e gorioal funding.
When olient e arned incom e rooults in on ar e a
program's fund balanoo being in oxooas of 15
percent of its annual — operating budget. — tb©
amount in e xo e so of 15 percent shall b e handl e d
in aooordanoo with the Division's rule on fund
balances, Rule .1125 of this Subchapter.
(3) For contracted programs:
(A) Th e ar e a program shall e otablish on e xp e ndi
tur e and fund balanc e policy.
(B) For contracted sor i 'icos, each contract shall
detail how tho oxpondituro and fund balanco
policy will apply to th e contract e d o e r < 'ic e .
(€) If th e ar e a program contracts with a provid e r
that also provides non aroa program oontrao
tual ser i 'iooQ, tho contracted provider shall bo
r e quir e d to id e ntify the fund balano e for th e
ar e a program contract e d s e rvic e only.
(b) Expenditures for Social Services Block Grant total
cost programs shall continue to bo budgeted and expended
in aooordano e with applioabl e Titl e XX matohing formul a
and e Ugibilit)' crit e ria. Settlement of Willie M. and TTiomas
S^ funds shall be in accordance with Rules .1 136 and .1 148
of this Section, respectively.
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NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
nftof apooittl granto from non divioional oouikmw bo long aa
th e o e funds do not supplant local or stat e funds. — For th e
purpos e of d e termining wh e th e r blook grant fundo ore boing
uflod to supplant looal of state funds within a ourfont yoof,
the prior year oxpondituro data shall bo used. — All rovonuo s
r e tailting from th e blook grant funded projoot shall bo uood
by th e s e rvic e whioh produced the r e v e nue. — If e xisting
9or>'ico8 cannot bo oxpandod or now sor^'icos started, tho
rovonuos shall bo used to roduoo the amount of block grant.
Statutory Authority G.S. 122C-112; 122C-147.
(o) State and Social Sor^'icoo Blook Grant adult develop
mental activit)' program funding ohall, unleoo a total coot
method of roimburoomont is authoriE e d by tho Division, b e
baaod upon a unit ooot rato determined by ooot studies
conducted by division staff. — Tho roimburoomont rato shall
b e boo e d upon actual n e t cost (total ooot l e ss oth e r oourc e a
of support) or tho otatewido maximum rate, whichever is
(d) State subsidy payments for dovolopmontal disabilitios
da)' pare and d e velopm e ntal dioabilities community resid e n
tial o e n'ioo shall continu e to b e r e imbursed on a statewid e
(o) Block grant fundo shall bo the first dollar expended
.1015 FUND BALANCE: COMPUTATION FOR AREA PROGRAMS
(a) In order for the Division to have input into the actions regarding fund balances in area programs, the following shall
take place after the certified public accountant's audit report is rendered and the tentative settlement report prepared:
(1) The fund balance set forth within the annual audit of area programs shall be verified by the Division.
(2) Since single county area programs are considered a department of the county for budgetary and financial
reporting, separate fund balances for the single county area programs are not required. In order to assure that
single county area programs are in compliance with the G.S. 122C-146 which states that fees received for
services shall not reduce or replace the budgeted commitment of local tax revenue, the Division shall review the
utilization of county general funds and the disposition of fees received for service each year.
(3) To determine the unrestricted fund balance for a multi-county area program or single county area program which
maintains a separate fund balance and the percent that it represents to the operating budget, the Division shall
use the following format:
Current Assets Per Audit Report
Less: Current Liabilities Per Audit Report
Fund Balance
Less: Reserve for Encumbrances
Reserve for Patients Accounts Receivable
Less: Allowance for Doubtful Accounts Patient
Accounts Receivable
Reserve for Accounts Receivable from Governmental Entities
Reserve for Inventory
Reserve for DWI Fees
Reserve for Drug Education School Fees
Reserve for Restricted Donations
Fund Balance Restriction Previously Approved by
DMH/DD/SAS
Willie "M"
Thomas S^
Other(List)
$
L
1
%.
i
1
i £
i
i
1
L
i
L
i
i
1
i
i
i
1
L
i
£
i
i
1
Unrestricted Fund Balance
Currently a pproved budget including expansion
Percent Unrestricted Fund Balance to Current Annual Budget
percent
£4} If the unrestricted fund balance is not in excess of 15 percent of the current annual budget, no action is to take
place.
(5) If the unrestricted fund balance is over 15 percent of the current annual budget, the Division shall recoup in
an amount equal to the fund balance in excess of J_5 percent in accordance with Tentative Settlement Report
procedures per APSM 75-1. Section 4.3. The area program may request permission from the Division Director
to restrict fund balance in excess of the 15 percent limitation for specific purposes.
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1440
PROPOSED RULES
(h) The amount of reduction of financial support by the division to area programs as referenced in Subparagraph (a'XS)
of this Rule may be decreased and/or delayed if there are extenuating circumstances which, in the opinion of the Division
Director, warrant relaxation of this policy. Any action taken in regard to this Paragraph shall be documented in writing.
Statutory Authoritx G.S. 122C-1 12(a)(6): 122C-144; 122C-146; 122C-147; 143B-10; 159-8.
.1016 DISPOSITION OF EQUIPMENT - NON UCR
(a) Equipment costing five thousand dollars ($5.000) or
more purchased with non-UCR Division funds by an area
program or contract provider shall be used for Division
funded client services. Except for Willie M and Thomas S^
funded purchases, equipment purchased with Division funds
may be transferred to other Division funded ser.'ices if no
longer needed by the original service. Willie M and
Thomas S^ purchased equipment shall be used only for
Willie M or Thomas S^ clients or disposed of in accordance
with Rule . 1 136 or . 1 148 of this Subchapter.
(b) Except as stated in Paragraph (c) of this Rule, should
transfer of equipment to Division funded services not be
possible, the Division shall be contacted by the area pro-
gram or through the area program for a contract provider
for disposition instructions. The Division will recover the
Division's share of the fair market value. The Division's
share will be established by the following methods in order
of preference.
( 1 ) Through inventory records which establish the
percent of funding for the equipment.
(2) The Division's percent of participation for the
area program for the year of purchase.
(3) Tlie Division's percent of participation for the
area program for the current year.
(c) Equipment which is fully depreciated and no longer
has any useful value may be disposed of in accordance with
area program policy.
(d) Tlie area program will have a written procedure
stating the equipment disposition policy for contract provid-
ers and include or reference this provision in aH contracts
between the area program and the contract provider.
Statutory Authority G.S. 122C-147.
.1017 START UP FUNDING
(a) The Division may provide funding outside of UCR for
initial purchases of equipment, supplies and operational
expenditures for the establishment of a program, ser\'ice or
facility.
(b) Requests for start up shall be made by the area
program, or through the area program in the case of a
contract provider, in whose catchment area the new pro-
gram, service or facility is being established. Requests shall
be made in writing to the Division Director or designee and
shall include a line item budget and justification. Requests
may include expenses for normal operation such as staff,
utilities and rent but such request may not exceed 60 days
without specific written authorization. Approvals will be
granted based on availability of funds and merit of request.
Statutory Authority G.S. 122C-147.
.1018 AREA AUTHORFTY FINANCIAL
FAILURE DEFINED
(a) An area authority is in imminent danger of failing
financially if the Division determines at any time that one or
more of the following conditions are met:
(1) The projected annual expenditures of the area
authority exceed the sum of the projected annual
revenues and fund balance of the authority and
the governing board of the authority has not
demonstrated an ability or willingness to take
appropriate action to correct the imbalance: or
(2) The area authority has not complied with the
reporting requirements of G.S. 122C-124. as set
forth in the annual Memorandum of Agreement
between the Division and the area authority.
fb) An area authority is in imminent danger of failing to
provide direct service to clients if it is in imminent danger
of failing financially as defined in this Rule.
Statutory Authority G.S. 122C-125.
SECTION .1100 - STATE AND FEDERAL
FUNDS ADMINISTERED
.1101 METHOD OF PAYMENT
(a) Grontfl d e oorib e d in thio Section shall bo made for tho
ficool y e ar.
(fe) An advance of 1/12 of tho total annual allocation of
grants shall be made to tho area program at tho beginning of
tho fiooal year. — Advano e m e nto of more than 1/12 may bo
mad e if jiuitifi e d and authorized by th e Divioion. — Applioa
tions for advonoomonts of moro than 1/12 shall bo made in
writing.
(e) Funding oubsoquent to tho advono e m e nt shall bo mado
on a monthly or quart e rly basis-
Payment will be based on earnings, monthly advancement
or other basis as authorized by the IDivision and stated in the
Memorandum of Agreement.
Statutory Authority G.S. 143B-10.
.1102 REQUEST FOR FUNDS
A monthly or quart e rly request for funds administered by
the Division and paid on a basis other than unit cost earn-
ings and alf<Midy ollocatod to tho aroa program and doooribod
in this S e ction shall be on a standard form format available
from the fiscal services section of the Division. Such
standard forms shall roquiro inforrration on typo of payment
requested (whether advance or on a roimburoomcnt basis).
1441
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
the baoia of tho roport (wbothor cash or nooruod oxpondi
turoo), tho grant ee idontifying numb e r, the month oov e red,
name of grant e e organization, tho name of th e pay e e if
different from grontoo, computation of tho amount ro
quoBtod, tho annual budget amount and tho name and
signature of tho authorized official submitting tho r e qu e ot.
Request shall be submitted to the Fiscal Office as directed
by the Division Director.
Statutory Authority G.S. J 43 B- 10.
.1103 AREA MATCHING FUNDS
(a) Eligibility'. Tho Division shall mako available to aroa
progromo ar e a matching funds appropriated to th e Division
under tho authorization of G.S. 122C 1'19. To b e e ligibl e
for such fiinda an area program shall moot tho roquiromonts
of tho Btondiu-ds in 10 NCAC 1 8 M regarding foquirod
sorviooo and shall hav e an approv e d annual plan.
(b) Match Basis. — Ar e a matching funds shall be grant e d
to aroa programs on a matching basis. — Tho amount of tho
match shall bo as dotorminod by tho Division's abilit)' to
fund formula for each program, but shall bo no l e ss than
one for on e (50 poroont) or more than nine for one (90
percent) subject to available state appropriations.
(c) Matching Monios. — Local monies that are eligible for
matching with state monies under G.S. 122C HQ include,
but are not limited to tho county and city general fund,
voluntary' contributions, patient fees, insurance rocoipts.
Medicare, federal and local share of Medicaid, ABC five
c e nto on th e bottl e , and ABC s e v e n p e rc e nt profits. — Local
monios e xp e nd e d for rental or purchas e of office or facility
s pace, and for renovation of buildings shall not bo eligible
for matching funds. — But local monios oxfwndod for pur
chas e of motor v e hicl e s wh e n th e e nd result would b e a cost
r e duction or for r e nting e quipm e nt wh e n such e quipment is
clearly more justifiably rented than purchased may be
eligible for matching with aroa matching funds.
(d) Application. — Application for ar e a matching funds may
b e mad e by submitting an annual plan and budg e t to th e
appropriate regional office.
(o) Allocation Among Regional Officoa. — Aroa matching
funds shall b e allocated annually by th e Dir e ctor of th e
Division among the regional offic e s.
(I) — Allocation of Funds.
(4) Each Regional Director at the discretion of the
Division Dir e ctor shall — allocat e — among th e
e ligible programs of his region th e ar e a match
ing fund s allocated to his region.
(3) Priority for allocating fiinds will bo dotormin ed-
e ach y e ar by th e Division Director in accordanc e
with approv e d annual plans.
Statutory Authority G.S. 122C-112; 122C-149; 143B-10.
. 1 104 FUNDING GROUP HOMES FOR
EMOTIONALLY DISTURBED CHILDREN
(«3 Pursuant to G.S. 122C 150, tho Division shall
administof a program of grants to area programs to bo
call e d funds for group homes for e motionally disturbed
childr e n.
(b) Such gnmts shall bo usod to support group homo s for
emotionally disturbed children.
(e) — Funds for group homos for e motionally disturbed
childr e n shall b e administ e r e d to ar e a programs as direct
grants and do not require local matching.
(d) — Programs may spend funds for group homos for
e motionally disturb e d children for th e following:
ft) to r e nt or loaso fooilitiooi
(3) fiimitufo or speciolizod equipment for residents'
(3) transportation of residents;
f4) oth e r nooosoor)' of> e rating e xp e nses as approved
by the Division; and
(5) tho purchase, construction or alteration, im
provomont or repair of a facility by the area
program or a non profit board with division
approval. Th e program shall m ee t th e r e quire
monts of tho following!
fA) — The Group Homo Mortgage Payment Program.
Th e Division may participat e in th e mortgage
payment program in part or in total dependent
upon tho availability' of s tate funds.
(^ — ?%e — Group — Heme — Purchase/Construction
Program.
(i) Th e Division may participat e in the down
payment and lump sum purchase or con
stniction of a group homo in whole or part
contingent upon th e availability of stat e
fiinds.
fii) Tho area progmm or non fHofit board shall
secure two property appraisals for review
and approval by th e Division prior to
purchas e ■
(i«) — If a now construction grant is requested,
tho aroa program shall submit two con
struotion bid contracts from tv . 'o building
contractors to th e appropriate regional
office for review and approval prior to
construction bid letting.
(€) — A requ e st for initial renovation of a newly
acquired — facility of fiv e thousand dollars
($5,000) or loQO shall bo submitted to tho
appropriate regional office of tho Division for
approval. — Initial minor r e pairs to facilities of
less than on e thousand dollars ($1,000) shall
bo approved by tho area program.
(©) — A request for alteration or improvement of an
e xisting facility' in excess of fiv e thousand
dollars ($5,000) shall be forv v 'ard e d to th e
Division Director's office through the appro
priate regional office of the Division for ap
proval.
^ — Each request aa outlin e d in (d)(5)(B) and (D)
of this Rulo shall bo accompanied by a narra
tive that explains the need for the purchase.
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1442
PROPOSED RULES
construotion. altomtion, improvomont or repair
of tho facility and a oopy of th e sob e matio
drawings and spooifioationo. — If approved by
the Division of Mental Health, Montal Rotar
dation and Subotanoo Abuso Sorviooa, thoeo
dmvvingD and opooifioationD oholl b e forv i. 'ard e d
to tho Division of Facility S e rs'iooo for roviow
and approval.
(F) — If tho group homo is operated by a non profit
board, the ar e a program shall sign a legally
binding oontraot with th e private non profit
agency for either tho mortgage paymonta to bo
mndo or the purchase or construction program
as indicated in (A) and (B) of (d)(5) of this
Rul e . — A oopy of th e appropriat e oontraot shall
bo obtained from the controller's office of tho
central offico of tho Division.
{&) — If a facility own e d by an ar e a program or its
privat e non profit contract ag e ncy wao pur
chased. — altered, — improved, — or rehabilitated
using division fiinds and lator ccosos to bo used
in tho delivery of o e r i 'io e s to cli e nts by th e
area program or its privat e non profit oontraot
agency, tho facility shall bo sold at tho current
fair market value as determined by tv . 'o inde
p e nd e nt appraioolo aoo e ptablo to the Division.
Tho Division shall b e reimburs e d a pro rata
share of the proceeds of the sale based on tho
percent of contribution made by the Division
in tho purohoo e , alt e rnation, improv e m e nt or
rehabilitation. — Th e ar e a program shall main
tain records — on a oontinuouo basis v i 'hioh
rofloct tho amount of contribution for pur
chas e , alt e ration, improv e m e nt, or r e habilita
tion by the Division, ar e a program or other
funding entity.
(e) — Fund Balance.
(i^ Th e Division may allow group homos for omo
tionally disturbed children to maintain a fund
balance of no more than — 15 percent of th e
current annual budget for tho group homo.
(3) Th e 15 p e rc e nt fund balanc e shall b e g e n e rat e d
e ntir e ly by non stat e funds.
(^) The Division may docroaoo state appropriation to
a group homo, thereby necessitating tho group
hom e to utiliz e its fund balanc e , if th e stat e
appropriation is required in order to continu e
operations at another home.
(43 The 15 percent fund balance allowed shall bo in
addition to th e amount th e Division would allow
to r e main in th e fund balanc e du e to r e strict e d
donations.
{&^ Except for tho roatricted donations and tho 15
p e rc e nt fund balanc e , funds for group hom e s for
e motionally disturb e d children shall be e xp e nded
(6) An allowance for a fund balance for group
homos that oro opwratod by on area program is
mad e in Rul e .1125 of thio Sootioni
(f) — To apply for funds for group homos for emotionally
disturbed children, an annual plan and budget for such funds
shall bo included in tho appropriato area program's total
annual plan and budg e t packag e wh e n it io submitt e d to tho
appropriat e r e gional offio e of the Division.
fg) — Funds for group homes for emotionally diaturbod
childron shall bo allocated among tho regions of tho Division
by th e Division Dir e ctor.
(h) Boood on th e appro' i ' e d annual plan and budg e t roquoot
submitted and availability of fund s , allocations of funds for
group homos for emotionally disturbed childron to aroa
progrtmifl within e ach r e gion shall be made by th e Division
Dir e ctor or his d e sign ee-
Statutory Authority G.S. 122C-1 12(a)(6); 122C-131;
122C-147; 122C-150; 143B-10.
.1105 FUNDING EARLY INTERVENTION
FOR THE EMOTIONALLY DISTURBED
{tt) — In furth e ranc e of G.S. 122C 150 tho Division shall
maintain a program of granto to programs for tho e stablish
mont of local programs of consultation, training, diagnosis,
and trcatmont of emotionally disturbed childron, ages birth
to s e v e n y e ars and to th e familieo of suoh ohildron. — Tbe
focus of thooo programs shall b e :
(4^ to improve the quality of child care environ
monta through tho training of day core workers,
nurs e ry school teach e rs, — par e nts, and others
involv e d in child car e ;
(3) to identify', through sorooning and diagnosis,
those children with emotional and other develop
m e ntal probl e ms; and
(3) to provide remedial programs e ith e r through
consultation or through spocializod thompoutic
proschool programs to those childron and their
familieo identifi e d ao b e ing in nood.
(fe) — Funds for e arly int e rv e ntion for th e emotionally
disturbed shall bo administered to area programs as direct
grants and shall require no local matching.
(e) — Funds for th e e arly int e p . ' e ntion for tho emotionally
disturb e d may b e utiliz e d for r e pairs and maintenonoo of
faciUtiofl which roprosont normal upkeep and do not materi -
ally increoao the value of tho facility or extend its useful
(4) — To apply for funds for early intep i 'ontion for th e
emotionally disturbed on annual plan and budget for such
funds shall bo included in the appropriate oroa program's
total annual plan and budg e t packag e wh e n it is submitted to
th e r e gional offic e of th e Division.
(e) — Funds for early intervention for tho emotionally
disturbed shall bo ollooatod by tho Diroctor of tho Division
among th e r e gional offic e s.
(Q — Baa e d on th e annual plan and budg e t submitt e d and
availabihty of funds, allocation of funds fof early intorvon
tion for tho emotionally disturbed to area programs within
1443
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
oaoh rogion ohall bo mado by the Rogional Diroctor with the
oonourronoo of the Divioion Dirootor.
Statutory Authority G.S. 122C-112; 122C-150; 143B-10.
.1107 COMMUNITY SUBSTANCE ABUSE FUNDS
(a) The Divioion ohall adminiotor a program of granto to
area programa to bo called Communit)' Substtinco Abuoo
Funda. — Those funds shall bo adminiatorod as direct granto
not requiring local matob T
(b) — Programc operated by an area program or contract
programs of the area progmm arc eligible for funding of th e
following oxpondituroo:
fi) otafFmg;
trav e l;
(3)-
(5) aupplieo;
f4) administrative and program equipment;
(5) rent or l e oo e of a r e sid e ntial facility;
(j^ other n e oeooar)' program noodo ao approv e d by
the Division; and
f?) repairs and maintenance — of facilities which
roproQont normal upkeep and do not materially
increas e the value of th e facility or ext e nd its
useful life.
(c) Community' Substance Abuse Funds may bo used for
th e purchoDO, construction or alt e ration, improv e m e nt or
repair of a r e sidential facility' by th e ar e a program or a
nonprofit board under contract with the area program with
division approval. — The program shall meet the following
requirem e nts:
(4^ Th e R e sidential — Faoilit)' — Mortgag e — Paym e nt
Program. — The Division may participate in the
mortgage payment program in port or total
oontingont upon th e availability' of state fundoj
(3) Th e R e sidential Facility Purchas e /Construction
Program.
(A) — The Division may participate — in the down
payment and lump sum purchas e or oonotruo
tion of a r e sid e ntial facilit>' in whol e or part
contingent upon the availability of state fund s .
^S) — The area program or nonprofit board shall
s e cur e two prop e rty appraioolo for r e vi e w and
approval by the Divioion prior to purohooe.
^G) — If a now construction grant is requested, the
area program shall submit two construction bid
contracts from t>vo building contractors to the
appropriate regional office for r e vi e w and
approval prior to construction bid letting.
(3) A request for initial renovation of a newly
acquired faoihty of five thousand dollar s ($5000)
or l e ss shall b e submitt e d to th e appropriat e
regional office of the Division for approval.
Initial minor repairs to facilitios of loss than one
thousand dollars ($1000) ohall b e approv e d by
th e area program.
(4) A request for alteration or improvement of an
existing facility — in oxcoss of five thousand
doUaro ($5000) shall bo forwardod to the Divi
o ion Dir e ctor's offic e through th e appropriate
rogional offic e of the Division for approval.
(5) A requoot for alteration or improvemopt of an
existing facility of five thousand dollars ($5,000)
or loss shall b e submitt e d to th e appropriat e
r e gional offic e for opproval.
(6) Each request as outlined in (o) (2) and ( 4 ) of thi s
Rule shall be accompanied by a narrative that
e xplains tho nood for the purohaoo, oonDtruotiont
alteration, improv e m e nt or r e pair of th e facility
and a copy of tho schematic — drawings and
s pooifioations. — If approved by tho Division of
Mental Health, M e ntal R e tardation and Sub
otanoo Abus e S e r < 'io e s, — th e s e drav i 'ings and
gpecifioationfl shall bo forv ^ 'arded to tho Divioion
of Facility Sor . 'ioo8 for review and approval.
(p^ If th e residential facility is op e rat e d by a non
profit board, th e aroa program shall sign a
legally binding contract with the private non
profit agency for either tho mortgage payments
to bo made or th e purohoo e /conotruotion program
ao indicat e d in (c) and (1) and (2) of this Rule.
A copy of tho appropriate contract s hall bo
obtained from tho Fiscal Service s Branch of tho
c e ntral office of tho Division.
(8) If a facility own e d by an ar e a program or its
private nonprofit contract agency was purchaood,
altered, improved or rehabilitated using division
fiindo and later coasea to b e us e d in th e deliver)'
of oor>'icoo to cli e nto by th e ar e a program or its
private nonprofit contract agonoy, the facilit)'
s hall bo sold at tho current fair market value as
d e t e rmined by two independent appraioolo ao
c e ptabl e to th e Divioion. Th e Divioion shall bo
reimbur s ed a pro rata share of tho proooods of
the sole booed on tho p>orcont of contribution
made by th e Division in th e purohoo e , alteration,
improvement or rehabilitation. — If an ar e a pro
gram or its oontroot progrom wishoo to retain o
facility that was purchased, altered, improved or
r e habilitated uoing fundo for Communit)' Sub -
otano e Abuse Fundot the aroa program or its
oontmot program shall pay to the Division a pro
rata shore of the current fair market value of the
facility as d e t e rmin e d by two independ e nt op
proisalo oooeptablo to th e Division boo e d on
contribution mode by tho Division in the pur
choflo oltorotion, improvement or rehabilitotion
of th e focilit)'. This provision may be waived by
th e Divioion Dir e ctor Ufwn V i 'ritten request of tho
progrom. Tho area program shall mointoift
records on o continuous bosis which reflect tho
amount of contribution for purohoo e , olt e rotion,
improvement or rohobilitation by th e Divioion,
area program or other funding entity.
(d^ — Fund Balance. — Tho Divi s ion may allow area pro
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1444
PROPOSED RULES
grama or contmct progmms to tnaintain a fund balonco of no
mor e than — 15 poro e nt of th e curr e nt annual budg e t in
aooordano o with Rul e .1125 of thio Sootion.
(^ — For an area program to apply for community' sub
stanoo abuse funds, an armuxil plan and budget for auoh
fundo shall b e inoludod in tho appropriate oroa program's
total annual plan and budg e t packag e wh e n it is oubmJtted to
the appropriate regional office of the Division.
{4) — Based on tho annual plan and budget submittod and
availabiUt>' of thes e funds, allocationo shall b e mad e y e arly
among area programi i by th e Dir e ctor of th e Division or his
designee.
Statutory Authority G.S. 122C-112; 122C-147; 143B-10.
.1110 SOUTH CENTRAL REGIONAL
ALCOHOLISM PROGRAM FUNDS
(a) In furthoranco of tho authorization of G.S. 122C 1 8 1,
adopted pursuant to G.S. 150B l1(o). th e Division shall
administer a program of grants to bo known as south central
regional alcoholism program funds.
(b) South central regional alcoholism program fundo shall
bo mad e a' . 'ailable to th e south c e ntral r e gion by tho Division
for alcohol programs in area programs to help eomponsato
for that region's not having on alcoholic rehabilitation
c e nt e r. — These fundi; shall b e us e d to suppl e ment the e xisting
alcoholism programo and to provide oood money svher e an
alcohol program does not exist.
(c) South central regional alcoholism program funds shall
bo administer e d to ar e a programs oo dir e ct gronto not
requiring local matching.
(d) South central regional alcoholism program funds may
bo utilized for repairs and maintenance of facilities which
r e pr e s e nt norrml upkeep and do not mat e rially inor e ao e th e
' ■ alue of the faoilit)' or e xtend itc U£i e ful lif e . — If approv e d on
an individual basis, purchasos of equipment as well as
payment of minor renovation expenses shall be allowable
uses of south central r e gional alcoholism program funds.
fe^ To apply — for south c e ntral — r e gional — alcoholism
program funds, an annual plan and budget for such funds
shall be included in the appropriate area program's total -
annual plan and budget package when it is submitt e d to th e
r e gional offic e of th e Division.
ff) — Based on tho armual plan and budget submittod and
availability' of funds, allocation of south central regional
alcoholism program funds to area programs is mad e by th e
south c e ntral R. e gional Dir e ctor with th e oonourr e no e of th e
Division Director.
Statutory Authority G.S. 122C-112; 122C-181; 143B-10.
.1111 DRUG ABUSE NLVTCHING FUNDS
(a) Under G.S. 122C 1 4 7 the Division shall administer a
program of grants to ar e a programc to provid e funds for
s e p i 'io e s relative to th e tr e atment and pr e v e ntion of drug
abuse.
(b) Drug abuse matching monies shall be administered to
area programs on a match basis. — Tho match ratio for each
area program shall b e in oooordono e with Rul e .1103(b) of
this Sootion.
(c) Local monies that are oligiblo for matching with state
drug abuse matching funda shall include, but shall not bo
Limited to, th e oount)' and oity gonorol fundo, oontributiono,
pati e nt and drug fooo, and umurano e and M e diooid roooipto.
(d) Subject to tbo availabilit>' of state drug abuse nmtohing
furtdfl tho E>ivi3ion Diroctof of hia dooignoo may approve tho
use of these fundo to provid e tr e atm e nt s e rviooo to inoaroor
at e d cli e nts provid e d that no mor e than 25 p e rcent of tho
clients boing served by tho program may bo incarcerated.
iMthough incarcerated, tho following olionto ore excluded
from tho 25 percent limitation:
(43 oliento who have boon admitt e d to tr e atm e nt and
are serving on tho first 30 days of their son
tence;
(3) clients who havo 60 days remaining to oen^e
prior to r e l e ao e from inoaro e mtion; and
(^) clionts incarcoratod in local jails and juvooilo
detention facilitioo.
(e) — Local e xp e nditur e s for r e pairs and maintononoo of
faoUiti e e which repres e nt normal upkeep and do not materi
ally inorooflo tbo value of tbo facilit)' of extend its uaoful life
shall bo oligiblo for inatching with drug abuse matcM Bg
funds. — Approval of e xp e nditures for rent and equipment
rtay b e made on an indi' i 'iduol baoie by tho Division Dirootor
or his designee.
(0 V i ^on costs of personnel are shared by more than ono
drug grant, a time distribution r e cord shall bo maintainod
for each staff m e mb e r p e rforming s e r^'ioos charged to
separate grants.
(g) To apply for drug abuao matching funda on application
for such fundo shall b e submitt e d by tho ar e a program
simultan e ously to th e appropriat e R e gional Dir e ctor and to
tho Doput)' Director for substance abuso. — j\n annual plan
and budget for such funda shall also bo included in tho area
program's total annual plan and budg e t package.
(h) The Regional Dir e ctors shall r e commend to th e
Doput)' E)iroctor for substance abuse the allocation of drug
abuse matching funds to oligiblo area programs within theif
regions.
ft) — Based on th e annual plan and budg e t submittod and
availability of fimds, allocation of drug abuse funds to area
programs shall bo mode by tbo Division Director or bis
d e sign ee .
Statutory Authority G.S. 122C-112; 122C-113; 122C-147;
122C-150; 143B-10.
.1114 EARLY INTERVENTION - STATE
AND FEDERAL FUNDS
(a) Tbo Division shall administer a program of grants to
ar e a programs to b e oall e d fundo for e arly int e p i 'ontion for
childr e n with m e ntal r e tardation or oth e r d e v e lopm e ntal
disabilities.
(b) Such gronta shidl bo uaod to provide for tho establish
1445
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
mont of local multidi8ciplinar>' toamo for tho proviaion of
program oonoultation, family support and family oonter e d
training for preoohool ohildron, (d e fin e d as those who hav e
not roachod thoir fifth birthday on or before October 15 of
tho ochool year) within tho following guideliDoo:
fi) Childr e n oor^'ed shall bo mentally r e tard e d,
dov e lopmontoll)' d i sabl e d, d e v e lopm e ntally
delayed or have at)'pical dovolopmont or bo at
risk for one of those conditions.
(3^ Priorit)' shall b e given to thos e childr e n und e r
three years of ag e .
(c) To apply for funds for early intor i 'ontion, an annufll
plan and budget for such funds shall bo included in the
appropriate aroa program's total armual plan and budg e t
package wh e n it is submitted to th e r e gional offio e of th e
Division.
(d) Funds for early intor i 'ontion s hall bo allocated among
th e r e gions of th e Division by th e Division Director.
(o) Boo e d on the approv e d annual plan and budget request
submitted and availability of funds, allooation of funds for
oarly intorvontion to area programs shall bo approved by tho
Division Dir e ctor or hio designee.
(a) The Division shall administer a program of grants to
area programs for early intervention services for children
and their families, in accordance with Part H of the Individ-
uals with Disabilities Education Act (IDEA).
(b) Funds may be used for any periodic or day/night
service that is identified as needed in the Individualized
Family Service Plan (fFSP) within the following guidelines:
m
children served shall be those with developmen-
tal delays, atypical desfelopment or those at risk
for these conditions as defined in JO NCAC 14K
.0103.
(21 with the federal early intervention funds, chil-
dren served shall be from birth through two
years of age and their families.
(3) with state early intervention funds, children
served shall be from birth through two years of
age except that:
(A) services may continue until the start of the
next school year for children who turn three
during the course of the school year, and
(B) three and four year olds may be served during
the summer and during the school year in
before/after school programs.
(4) funds shall be used to supplement and increase
services for these children and may not be used
to supplant other federal, other state or local
funds.
Statutory Authority G.S. 122C-1 12(a)(6); 122C-131;
122C-150; U.S.C. 1471 Part H IDEA.
.1115 FUNDING GROUP HOMES FOR
DEVELOPMENTALLY DISABLED
ADULTS
fft) Pursuant to G.S. 122C 1 4 1, tho Division shall
administer a program of grants to area progromo to bo
ottllod fimdn for group hom e s for developm e ntally disabl e d
ttdulto.
(b) Suob gronta shall be uood to support group homoa for
dovolopmontally disabled adults.
(e) — Adults in whos e b e half funds ar e administ e r e d to
programs shall b e^
ft) 1 8 year s of ago and older; and
(3) rosidonta of North Carolina.
(d) To bo eligibl e for funds for group homos for develop
mentally disabled adults, — th e oommunit)' shall provide
rosidonto with a total array of sorvioos and programs to moot
thoir various needs and lovol s of capability and not just
24 hour oaro. Th e s e programs shall promote a oompl e te life
for th e s e individuals in a oommunit)' s e tting.
(o) Funds for group homos for dovolopmontally disabled
adults shall bo administorod to area programs as diroot
grant s and do not r e quir e local matching.
(f) — Programs may sp e nd funds for group hom e s for
dovolopmontally disabled adults for the following !
(+) renting or loosing facilitie s ;
(3) furniture or spooializ e d e qu i pm e nt for r e sid e nts;
(5) transportation of r e sid e nts;
(4) other nocosoory operating oxponsos as approved
by tho Division; and
(5) the purchas e , oonotruotion or alt e ration, — im-
prov e m e nt or r e pair of a facility by th e ar e a
program or a non profit board with division
approval with tho exception of programs partici
pating in f e d e ral D e partm e nt of Housing and
Urban Dev e lopm e nt (HUD) S e ction 202 proj e ots
which shall follow tho requirements spocifiod in
(f)(6) of this Rulo. Tho program shall moot tho
following r e quir e m e nts:
fA) — Th e Group Hom e Mortgag e Poym e nt Program.
Tho Division may participate in tho mortgage
payment program contingent upon tho avail
ability of State funds.
(B) — Tbe — Group — HeiHe — PurohaB e /Construotion
Program.
(i) The Division may partic i pate in tho down
paym e nt or lump sum purchase or oon
struction of a group hom e in whol e or part
contingent upon tho availability of State
funds.
(ii) Th e ar e a program or non profit board shall
secure two prop e rty appraisals for review
and approval by tho Div i sion prior to
purchase.
{i«) — If a now construction grant is r e qu e st e d,
th e ar e a program shall submit two oon
struction bid contracts from two building
contractors — to tho appropriate — regional
office for review and approval prior to
oonstruotion bid lotting.
(€) — A request for init i al renovation of a newly
acquired — facilit)' of fivo thousand dollars
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1446
PROPOSED RULES
($5,000) or loan ohnll bo aubmittod to the
appropriato regional offioo of th e DiviDion for
approval. — Initial minor r e pairs to faoilitioo of
loaa than one thousand dollars ($1,000) shall
bo approved by the area program.
{©) — A requ e st for alt e ration or improv e m e nt of an
e xisting facility in oxoooo of fiv e thousand
dollars ($5,000) ahall bo fors ^ 'ardod to the
Division Director's office through tho appro
priat e regional offio e of th e Division for ap
proval.
(E) — Each request as outlined in Parts (0(5)(B), (C)
and (D) of this Rule s hall bo aooompaniod by
a narrativ e — that e xplains the neod — for th e
purchas e , oonotruotion or alt e ration, improv e
mont or repair of tho facility and a copy of the
schematic — drawings and specifications. tf
approved by the Division of Mental H e alth,
Developm e ntal — Disabiliti e s — and — Subotxmo e
Abuse Services, these drawings and specifica
tions shall be forwarded to tho Division of
Facility Sop i 'iooo for rev i ew and approval.
(¥) If th e group home is operat e d by a non profit
board, tho area program shall sign a contract
with the private non profit agency for either
th e mortgag e paym e nta to be made or th e
purchas e or construction program as indicat e d
in (A) and (B) of (0(5) of this Ru l e. A copy
of tho appropriate contract shall be obtained
from th e controller's offio e of th e c e ntral
offio e of the Division.
fG^ — If a facility' owned by an area program or its
private non profit contract agency was pur
chased, — alt e r e d, — improv e d, — or r e habilitat e d
using division funds and later c e as e s to b e us e d
in tho deliver)' of services to clients, the facil
ity may be sold at tho current fair market
value or r e tained, and th e ar e a program or its
privat e non profit contract ag e ncy shall r e im
burse tho Division according to tho following
roquiromonts:
(i) Th e curr e nt fair mark e t valu e , acc e ptabl e
to th e Division, ohall bo determined by
two indopondont appraisals submitted and
used as guidance.
(ii) R e imburs e m e nt shall b e a pro rata shar e of
th e accepted value, based on th e oontribu
tion made by the Division in tho purchas e ,
construction or alteration, improvement or
r e pair of th e facil i ty.
(iij) — Th e ar e a program shall maintain a r e oord
which roflocts tho amount of contribution
made by tho State for purchase, construe
tion or alt e ration, improv e m e nt or repair
to th e fac i lity;
(6) to participate in a federal Department of Hous
ing and Urban Development (HUD) Section 202
project (12 U.S. C. § 1701q) for tho purohoso,
oonotruotion or alteration, improv e ment or repair
of a group hom e with division approval. The
program shall moot tho following roquiromonts'.
(A) — The area program may foquoat funds fof this
proj e ct from th e Division. Th e Division may
participat e in the HUD Sootion 202 projoot
contingent upon the availability of State funds.
(B) — Tho area program shall sign a contract with a
private non profit agency to op e oify that if the
group home oeaooo to bo used in th e delivery
of services to tho clients, the facility may bo
sold at tho current fair market value or re
tain e d, and th e privat e non profit ag e ncy shall
r e imburs e th e Division according to th e fol
lowing requirements!
(i) Tho current fair market valuo, acceptable
to th e Division, shall b e d e t e rmin e d by
two ind e p e nd e nt appraisals submitt e d and
used 08 guidance.
(h) Reimbursement shall bo a pro rata shore of
th e accepted valu e , boo e d on th e oontribu
tion made by tho Division in th e purchase,
construction or alteration, improvomont or
repair of the facility.
(€) — The ar e a program shall maintain o record
which r e fl e otfl th e amount of contribution mode
by the State for purchase, — construction or
altomtion, improvomont or repair to tho group
(g) Fund Balanc e .
(1) Tho Division may allow group homo s for dovol
opmontally disoblod odults to maintain a fund
balanc e of no mor e than 15 percent of tho
curr e nt annual budget for th e group hom e .
(2) Tho 15 percent fiind balance aholl be genorotod
entirely by non State fund s .
^) Th e Division may decr e ase State oppropriation
to group hom e , th e r e by n e c e ssitating th e group
homo to utilize its fund bolonco, if tho State
appropriation is required in order to continue
op e rations at anoth e r hom e .
f4) Th e 15 percent fiind balanc e allow e d shall b e in
addition to the amount tho Division would oUow
to remain in the fund bolonoo due to restricted
donations.
(5) Except for th e r e strict e d donations and th e 15
percent fund bolonco, fimds for group homos for
dovelopmontally d i sabled adults shall be ex
p e nd e d loot.
(6^ An allowanc e for a fund balanc e for group
homofl that ore opwratod by an area program is
made in Rule .1125 of this Section.
(h) To apply for funds for group hom e s for d e velopmon
tally disabl e d adulto^ on annual plan and budget for such
fund s s hall bo included in the appropriate oroa program's
total onnuol plon and budget package when it is submitted to
1447
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
tho appropriate regional offioo of tho Divioion.
(i) Fundo for group homoo for d e v e lopm e ntally dioablod
adulto shall bo allooatod among tho rogiomi of tho Divioion
by tho Division Diroctor.
(j) Boood on tho approved annual plan and budget roquoot
submitt e d and availability' of fundo, allooation of fundo for
group homoo for dovolopmontally dioabl e d adulto to ar e a
progmma within oach region shall bo mado by tho Divioion
Diroctor of his deaignoo.
(Ic) Tho monthly rent for oUonto reoiding in HUD fiiiano e d
group hom e o io dotormin & d aooording to th e orit e ria oot forth
in HUD Handbook ISSO.S, "Oocuponoy Roquiromonto of
Subsidized Multi Famil>' Housing Programs" (which may bo
obtained from tho Doportmont of Houoing and Urban
Dovolopmont, 2306 Woot Moadowview Road, Groonoboro,
H-. — G-. — 2 4 701) and horoby inoorporatod by roforonoo,
including any subsoquont omondmonts and editions. — Should
tho rent for thooo rooid e nto oxoood one hundr e d and fifty
doUaro ($150) p e r month, a room and board rote higher than
tho ootablisbod maximum rate, in aocordanoo with tho
provisions of 10 NCAC 4 7A .0201, shall bo ohargod. The
full r e nt shall b e payabl e to tho project own e r of tho hom e .
RocponoibilitioD and formula for paym e nt of thio amount -afa
as follows!
(i^ The area program or private non profit agency
operating th e homo ohoU pay out of ito operating
budgot, th e first one hundr e d and fift)' doUoro
($150) of the HUD determined rent and 20% of
any amount that oxcooda the one hundred and
fifty doUaro ($150).
(2) Th e remaining 8 0% of tho amount that e xc ee ds
tho ono hundred and fifty dollars ($150) shall be
paid by tho rooidont or any othor party who
aooumoo rooponoibility.
Statutory Authority G.S. 122C-1 12(a)(6), (11); 122C-141;
122C-147.
.1116 FUISTDS FOR MENTAL RETARDATION
COMPLEXES
(a) — Identification. Pursuant to G.S. 122C 112 the
Divioion ohall adminiotor a program of granto to K e ndall
C e nter in Greensboro and M e ckl e nburg C e nt e r for Human
Development in Charlotte to bo called funds for mental
retardation complexes.
(b) Uo e of Fundo. — Such grants ohall b e uo e d to provid e
day car e , r e oid e ntiol cor e , and oth e r s e rvic e s to m e ntJilly
retarded children and adults.
(©3 — The matching requirements of funds for mentid
retardation oompl e x e s and th e typw of e xp e nditur e s e ligibl e
to b e support e d by funds for m e ntal r e tardation oompl e x e o
aro tho same as those for area matching funds sot forth in
Rule . 1 103(b) and (c) of this Section.
Statutory Authority G.S. 122C-51; 122C-112; 143B-10.
.1117 GRANT-IN-AID FOR ADULT
DEVELOPMENTAL ACTIVrrY
PROGRAMS
(tt) Th e Divioion shall administer a program of grants to
area pwogmms to be called tho grant in aid for adult devol
opmontol activity progrom sr
(b) — Such grant in aid fundo ohall bo uood to oupport
cli e nts who ar e :
(i) substantially — mentally — retarded — er — severely
phyoioally dioablod persons as doFmed in 10
NCAC HK .0103 e xc e pt that clients with a
primary diagnosis — of othor than oubotantial
mental retardation of sovoro phyoioal dioabilit)'
may bo eligible fof funding provided!
fA) — th e y hav e be e n in an i\DAP continuously from
tt dat e prior to January 1, 1975 and ore our
rently receiving j\DAP grant in aid; and
(B) — dint all othor ADAP standtirds and regulations
Buoh ao annual re evaluation and r e f e rral to the
Divioion of Vocational Rehabilitation S e rvic e s
shall apply equally to this client population; or
(3) othorv . 'i6e substantially dovolopmontally disabled
which m e ans those individuals functioning at
e ith e r L e v e l I or L e v e l 11 as defin e d in "Pion ee r
Funding System Qpomtions Manual, Volume HI,
Level of EUgibilit)', Section 4 , Child and Adult
D e v e lopm e ntal Disability", adopted pursuant to
G.S. 150B l'l(c);
(3^ 16 years of ago and older;
(4) residents of North Carolina; and
(S) e ligibl e for ADAP grant in aid regordleoo of
financial r e souroeo with th e e xc e ption of a cli e nt
whose work earnings exceed one half tho federal
statutory' minimum wage ovo f a consecutive
90 day p e riod. — With prior approval of th e
appropriat e area director or d e sign ee , oli e nto
who are participating in a gupportod employment
program authorized by tho Division may hav e
e arnings in e xcess of on e half th e minim am
wage. — Eligibility' for olionto in non support e d
employment settings whoso earnings have ox
ceedod over one half tho minimum wage for
ovor 90 oonoooutivo days may b e e xtended for
up to on e cal e ndar y e ar if support e d e mploym e nt
options aro not available locally and the client ia
ineUgible for other sor>'ice8 from the Division of
Vocational R e habilitation, — or if th e client's
social, behavioral or vocational skill d e ficits
preclude participation in supported employment
options and results in ineligibility for othor
vocational r e habilitation D e r < 'io e o. The e ligibility'
e xtension shall occur through the existing cli e nt
rocortification process carried out by tho dosig
natod area program qualified dc i 'elopmontal
dioabllitioo profoooionol (QDDP) as rofer e nood in
10 NCAC 18M .0 8 00. R e qu e sts for th e e xt e n
s ion shall be baaed on a joint case review in
volving a roprosontativo of tho involved j\Di\P,
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1448
PROPOSED RULES
tho local VR unit and the aroo program. — The
roquo o t ohall id e ntif^' th e opooiFio skill d e fioito
prooluding e ligibilit>' for support e d omploymont
or other vocational rehabilitation DCP t 'iooa and
include plana for thooo deficito. — Tho oortiFication
oKtonoion may b e r e applied for a maximum of
two tim e o. — Th e sam e orit e ria and proo e dureo
shall bo followed in each inatonco of roapplica
tion as arc required for the initial extension.
(o) Grant in aid for adult dovolopmontal activity programs
shall b e adminiotcrod to area programo up to a otandard rate
per month, as approved by the General — Assembly or
Division Director, or both, except programs may receive
federal grant in aid funds on a total oost baoio with th e
Division Dir e ctor' s approval in aooordano e with S e ction 26
of tho "Area Program Budgeting and Procedures Manual"
(division publicat i on APSM 75 1) as published June 27,
198 ' 1. which is adopted by r e ferenc e . — Copi e s of Section 36
of th e "Area Program Budg e ting and Proc e dur e s Manual"
may bo insf>octed at the Raleigh office of tho Division or
copies may bo obtained from the Publications Office of the
Division at a charge which cov e rs printing and postag e .
(d) Funding of now adult d e v e lopmental aotivit)' programs
shall bo limited to the areas (count)' or community or both)
specified in division publication j\fSR 120 1, "Development
of N e w — Adult — Deve l opm e ntal — Activity — Programs. " — as
publish e d July 1, 19 8 1. which is adopt e d by r e f e r e nc e .
Copies of this publication may bo inspected or obtained as
specified in (c) of this Rul e .
(o) To apply for ADj'VP grant in aid funds on onntial plan
and budget for such fundi) shall b e includ e d in the appropri
ate area program's total annual plan and budget package
when it is submitted to the appropriat e regional office of tho
Division.
(f) Approval of releas e of ADAP grant in aid funds shall
bo made by the Division Director or his designee. — Theso
adoptions by — reference — afe — in accordance — with — G.S.
150B M(c).
Statutory Authority G. S.
122C-141.
122C-1 12(a)(6); 122C-131;
.1118 SPECIALIZED COMMUNITY-
RESIDENTIAL CARE SUBSIDY
(q) Th o Division s hall administer a program of grants to
area programs to b e call e d sp e cializ e d community' resid e ntial
care.
(b) These funda shall be tised to provide for the purchase
of residential services for moderately, s e verely, and pro
foundly r e tard e d cli e nts in sp e cializ e d oommunity residential
programfl.
(c) Sp>ocialized community residential core subsidy shall
be administered to area programs up to a stxindard rate per
month 06 approv e d by th e G e n e ral Ass e mbly. Division
Director or both.
{4) — Clients in whose boholf funds ore administered to
programs shall bo:
(4^ moderately, sovoroly, or profoundly retarded
including infants at high risk for mental rotarda
tion, for whom a diagnootio label of mental
retardation is inappropriate prior to three years
of ogo, OS cortified by a lioonsod phyoioian, and
for whom a less restrictiv e program io not
available;
(3) botwoon tho ages of birth and 21; and
{¥) residents of North Carolina, except for clients
rec e iving resid e ntial oare subsidy who ar e other
wise eligibl e and whoso resid e ncy status ohongoo
to non state residency after admission. — Clients
with such a change in residency status may bo
includ e d for funding for up to on e y e ar provided
a plan for transf e r of tho oliont to tho now
re s idency s ite or for oltomativo funding is estab
lished and pursued and this plan is approved and
reviewed qtmrterly by the R e gional Director and
area director or th e ir respectiv e dosigneoo.
CUonts not mooting the provisions of (d)(1) and (2) of this
Rule may receive funding upon s pecial approval of tho
Division Dir e ctor.
{p) — To apply for sp>ecializod oommunit)' resid e ntial ooro
subsidy funds, on annual plan and budget for such funds
shall be included in the appropriate area program's total
annml plan and budget package wh e n it is submitt e d to tho
appropriat e r e gional offic e of th e Division.
ff) — Disbursement of specialized community residential
caro subsidy funds shall bo mado aftor approval of tho plan
and budg e t by th e R e gional Dir e ctor.
Statutory Authority G.S. 122C-1 12(a)(6); 122C-131;
122C-141.
.1119 MENTAL RETARDATION
COMMUNITY SERVICE FUNDS
{er) Pursuant to G.S. 122C 112. the Division shall
administ e r a program of grants to b e call e d m e ntal rotarda
tion community s e rvice funds. — Th e s e funds shall bo
allocated to tho eastern region in the amount of at least five
hundred thousand dollars ($500,000) and to other regions
bas e d upon th e availability of funds.
(b) — M e ntal r e tardation community s e rvic e funds may bo
used to support mental retardation sorvicos including, but
not limited to, dovolopmontxil day caro for children and
activity programs for adults.
(0) M e ntal r e tardation oommunity s e rvic e funds shall bo
administered to area programs as direct grants requiring no
local matching.
(d^ — To app l y for mental retardation oommunity son i 'ioo
funds, an annual plan and budg e t for such funds shall b e
included in the appropriate area program's total annual plan
and budget package when it is s ubmitted to the appropriate
r e gional offic e of th e Division.
fe) — Mental r e tardation community s e p - 'io e funds may bo
utilized for repairs and maintenance of facilities which
roprosont normal upkeep and do not materially increase tho
1449
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
value of tho facilitj' or oxtond its useful life.
(f) Fundo appropriatod for montal rotordntion oommuB ky
son'io e shall bo allooat e d to aroa progromo of tho gppropri
ato region by tho Diviaion Director or hio designee.
Statutory Authority G.S. 122C-112; 122C-147; 122C-151.
.1120 COMMUNITY DEMONSTRATION
PROJECT FUNDS
(ft^ Purouant to G.S. 122C 112, tho Divioion ohall
adminiotor a program of grants to bo oall e d oommua tty-
demonstration project funds.
(fe) — Such fiinds shall be used for tho development and
domonotration of now and innovativ e oommunit)' oorvioes
for m e ntally retarded poroono.
(e) — Community demonstration projects funds shall bo
adminiotorod to aroa programs as direct grants requiring no
local matohing r
(d) To apply for oommunit>' d e monstration proj e ct fundo,
an annual plan and budget for such funds shall bo included
in tho appropriate area program's total annual plan and
budget fKiokag e whan it io submitted to th e regional offic e of
tho Division.
(e) — Community demonstration project funds shall bo
allocated among the regions of tho Division by the Division
Director or his doaignoe.
ff) — Community demonstration project fundo may b e
utilized for repairs and maintenance of facilitioe which
roprosent normal upkeep and do not materially incrooso tho
value of th e facility or e xtend its uo e ful lif e .
(g) — Based on th e annual plan and budget submitt e d and
availabilit>' of fundo, allocation of community domonotration
project funds to area programs shall bo made by tho Divi
sion Dir e ctor or hio d e oign ee .
Statutory Authority G.S. 122C-112; 122C-147; 122C-150;
143B-10.
.1121 SOCIAL SERVICE (TITLE XX)
BLOCK GRANT FUNDS
(a) — Tho Divioion shall administer a program of s orviooa
and training from fundo provided by th e Unit e d Stat e s
D e partm e nt of Health and Human S e rvio e o und e r th e
authority' of Title XX of tfto Social Socurity Act, 4 2 U.S.C.
1397 13 9 7f.
(fe) — Servic e fundo ohall b e us e d to provid e allowabl e
o e rvio e o to moot opeoifio noodo of individuals who ar e
emotionally disturbed, — mentally retarded, — or substance
abusers and who have been certifiod eligible by tho appro
priat e ar e a program. — Training funds ohall b e uo e d to
provid e training aotiviti e o r e lat e d to th e provioion of Titl e
XX fundable ser>'icoo.
(e) — Programs shall bo operated by the Divioion, an aroa
program or through contractual arrangement with an ar e a
program.
fd) — Allocation of fundo to area programs shall bo on an
annual basis and shall bo based on the needs of eligible
clients as documented in tho aroa program' s approved
annual plan of work and budg e t r e qu e ot.
(e) — Divioion staff shall provid e administrativ e support
necessary for progmm development and technical asoistaneo
to insure compliance — with federal — and state laws and
r e gulation s .
(f) — Reimburoement shall b e mad e in aooordanoo with
Sections 5 and 26 of tho "Area Program Budgeting and
Procedures Manual" (division publication APSM 75 1),
adopt e d pursuant to G.S. 150B 11(0).
(g) Aroa progromc oball oond roimburo e mont formii to th e
controller' s office of the Division by tho 10th day of tho
month following sop . 'ico.
Statutory Authority G.S. 122C-147; 122C-150; 42 U.S.C.
Section 1397-1397/.
.1123 AREA MENTAL HEALTH CENTER
CONSTRUCTION PROJECT
(e) — The Division ohall administer a program of direct
grants from state funds to area programs for tho construe
tion of oompreh e noiv e ar e a programo or compon e nts of ouch
programs which ohall be known ac oompr e h e noiv e ar e a
programs construction project grants. — Before such grants
can be awarded a certificate of need shall be obtained by tho
grant ee ,
(b) Such grants may be used for the following:
(4^ Architect's fees for the preparation of drawings
and sp>ocifioation8 for tho project;
(2) F ee s for preparation of contour maps and ooil
inv e otigation;
(3) Coots of advertioement for construction bids;
f4) Construction contracts including general, plumb
ing, e l e otrioal, e l e vator, air conditioning and
v e ntilating and any oub contract or ooporat e
contract relative to tho construction;
(5) Items of movable equipment when approved by
th e Divioion;
(6) Cooto of advertisement for bido for movabl e
equipment;
(^?) Tho coot of ohongo orders relating to conotruc
tion or e quipment when such chang e ord e rs ar e
approv e d by th e Divioion of Faoilit)' S e P i 'io e o of
tho Department of Human Resource s and tho
Division of Mentxil Health, Montal Retardation
and Subotano e Abus e S e rvic e s.
(8) Th e cost of landooaping including related arohi
tocturol service, seeding, sprigging or sodding of
the site and the planting of trees and shrubs as
would b e normally consid e r e d a part of tho
g e n e ral construction contract. Tho cost of
landscaping recreational areas such as courts and
outdoor patient areas for therapeutic effects of
th e e nvironm e nt in th e mental h e alth c e nt e r may
b e paid from division fundo upon prior approval
from tho Divis i on of Montal Health, Montal
Retardation and Substance Abuse Sor>'ioo3 and
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1450
PROPOSED RULES
the Divioion of Facility Sorvicoo. — In ordor to
obtain approval, — th o grant ee must Bubmit a
writton proposal fully justil^'ing th e full)' juotif)'
i ng tho thorapoutio effort of tho landscaping.
(e) — Such grants flhall not bo uood for tho following;
fj^ purohao e of sit e ;
f2) attornoy — fooo for title ooaroh, — pr e parat i on of
doodfl and other such closing costs;
{¥) surveyor's foo for survey of lot for purposes of
deed preparation;
{4) oonotruotion or e quipm e nt not approved by th e
Division;
(5-) landscaping in excess of that included in tho
general contract or that which is inconsist e nt
with otipulationc r e garding landaoaping contain e d
within this Rule; and
(6^ stationer^', printing, s ecretarial services, pwstago,
trave l , and oth e r incid e ntals in conn e otion with
the proj e ct.
fd^ — Application for such finds shall bo upon a standard
form which s hall require the following information:
f4^ name of applicant;
(3) addreoD of applicant;
(3) the name and typo of the proposed facility and
its proposed address;
(4) th e typ e of construction wheth e r n e w, on e xpan
sion of e xisting facility, r e mod e ling or oth e r;
{&j tho type of ownership of the project, whether
public or private non profit;
(6^ the typ e of op e rational control of th e proj e ct.
wheth e r public or privat e non profit;
f?3 the name, address and telephone number of tho
applicant's representative;
f8) the nam e , addr e ss, and telephon e numb e r of th e
project archit e ct;
^ a statement of the need for tho facility;
(4#) data on the occupancy of the proposed facility;
(44^ d e scription of programs to b e conduct e d in th e
facil i ty;
<4-3^ information on tho financial resources available
to the facility;
fl-59 th e total d e v e lopm e nt cost;
f44) information on whether titl e to the sit e will be
vested in tho applicant, tho agency to operate the
facility, or othorv i 'isc;
4+5) wh e th e r th e applicant has titl e in f ee simpl e or a
l e as e hold, or oth e rwis e , and if th e applicant has
only a leasehold, information on tho nature of
th e leas e ;
(4^) a copy of th e abstract of titl e pr e par e d by on
attorney;
f4?) a copy of the site sur^'oy, soil investigat i on
reports and land appraisals, whore applicable;
fl-8) wh e r e applicabl e , a c e rt i fication from an archi
t e ot of th e feasibility — of improving e xisting
structures;
{W) a copy of the plot plan;
(30) target dates for completion of Bohomatio, prelim
inar>'. and final drawings; and
(34) an e stimated construction budg e t.
fe) — Such standard form application shall also require
assurances of tho following:
(+) that th e applicant posseoooo l e gal authority' to
apply for and r e c e iv e tho grant or loan, and to
finance and construct the proposed facility; that
Q rosolution, motion or similar action has boon
duly adopt e d or pass e d oo an official act of tho
applicant's gov e rning board, authorialng tho
filing of tho application, including all under
standing and assuroncoa contained therein, and
directing and authorizing th e p e rson identified as
th e official r e pr e s e ntativ e of the applicant to act
in connection with tho application and to provide
such additional informat i on as may bo required;
(3) that suffici e nt fiindo will b e available to moot tho
non state share of th e costs of constructing the
facility, and that sufficient funds will be avail
able when construction is completed to assure
e ffective — op e rat i on — and — maintonanoo — of tho
faoilit)' for the purpos e s for which constructed;
(5) that approval by the Div i sion of the final work
ing drawings and Bpocifioat i ona will be obtmned
b e for e the project is adv e rtis e d or othorv ^ 'iso
plac e d on the mark e t for bidding; that it will
construct tho project, or oauoo it to bo con
structod, to final completion in accordance with
th e application — and approv e d — drawings and
sp e oifioationo; that it will submit to th e Soorotar)'
of Human Resources or his designee for prior
approval changes that materially alter tho scope
or costs of tho proj e ct, us e of spac e or funo
tionol layout; that it will not enter into a oon
s truction contract or contracts for the project or
a part thereof until tho conditions of the con
struction grant or local program have boon mot;
{A) that e xc e pt as oth e rwis e provid e d by state or
local law. all contracting for construction (in
eluding the purchase and installation of built in
e quipm e nt) shall b e on a lump sum fix e d pric e
basis, and oontraota will be awarded on the baois
of competitive bidding with award of tho con
tract to tho lowest responsive and responsible
bidd e r — (Th e provision for e xc e ptions baa e d on
stat e and local law will not bo invok e d to giv e
local — contractors — et — suppliers — a — pwrcentago
preference over rKxi local oontrootors bidding for
th e sam e contract. — Such praotio e o ar e precluded
by this assuranc e .);
(5) that it will provide and maintain competent and
adequate architectural engineering aupor i 'ision
and insp e ction at th e construction sit e to insur e
that th e complet e d work conforms with tho
approved drawings and 3p)ocifications; that it will
furnish progress reports and such other informa
1451
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
)
tiop 00 tho Socrotary of Human Roeourcoo or hio
dooignoo may roquir e ;
(6) that an oBoumnoo of oompliono e with Title VI of
tho Civil Righte Aot of 196 4 applying to the
facilit)' doacribod in this application was filed or
is attaohod to tho applioation;
^ that it will maintain grant or loan aooounting
rocordo (idontifiablo by grant or loon number),
including all records relating to tho receipt and
oxpondituro of otat e grant or loan fundo and to
tho expenditur e of th e non state shore of th e ooot
of project for throo years after the completion
of tho project if an audit io conducted by or on
behalf of th e D e partm e nt of Human Rooouro e o
within thot period, or in th e cos e wh e r e no oudit
is performed for five yoars; oxoopt that should
audit questiona arise with rospoct to tho grant or
loon, th e — rooordo will be mointain e d until all
ouoh quootiono ore rooolvod (Roprooontativ e a of
tho stoto govommont aholl hove occoos to oil
roasonablo times to tho grantee's records ond to
work whonovor it io in preparation or progrooo,
and tho oontrootor shall provid e proper fooiliti e o
for such occoss and inspKx i tion.);
{%) that the facility' will bo operated and maintained
in aooordono e with th e roquiromento of opplioa
bio otate and local ag e noioo for tho maint e nono e
and operation of such facilitioo!
(9) that tho applicant will roquire tho facility to bo
dooignod to comply with the "lUuotrat e d Hand
book to th e Handicapp e d S e ction" adopted by
tho North Carolina Doportmont of Insurance in
197 4 and available from tho Engineering and
Building Codes Divioion of the Departm e nt of
Insuranc e , P.O. Box 263 8 7, Raloigh, North
Carolina 27611 at o nominal cost. — (The oppli
cant shall be responsible for conducting inspoc
tions to insur e oompl i onoe with th e s e sp e oifioa
t i ono by th e oontrootor.);
(4^ that the applicant will cause work on the project
to bo oommoncod within a roasonablo time after
rec e ipt of notification from th e Deportm e nt of
Human R e oouro e e that fundo have boon ov ^ 'ordod,
ond thot tho projoct will bo prosecuted to com
plotion with roaoonoblo diligonoo; and
^44) that any stat e funds r e c e iv e d pursuant to a grant
or loon will b e us e d solely for d e froying th e
dovolopmont cost of the proposed projoct.
ff^ — Such standard form application shall also require
asourono e s of th e following:
fi^ That th e building will conform to all applicabl e
roquiromonts of tho appropriate state plan and
tho regulations pertaining thoroto;
(3) That all portions and oen i 'ioes of th e e ntir e
facility for th e construction of which, or in
connection with which, aid is sought, will bo
mode available without discrimination on oc
count of oieod, and no professionally qualified
p e rson will b e diooriminot e d against on oooount
of orood with r e sp e ct to th e privil e g e of profeo
sionol practice in tho facility;
(J) That tho fooilit)' will furnish on area sors'ico ond
e ither will fiimish b e low ooot or without ohorgo
a reasonable volum e of sor i 'iooo — to p e rsons
unable to pay for such oor^'ioos, or will supply
on attached juotifiootion for not furnishing below
cost or without charge a roasonablo volum e of
s e rvic e s to p e rsons unabl e to pay th e r e for;
(4) The facility will bo usod for tho purposes for
\ » 'hioh it is oonotmotod for not logs than 20 years
aft e r th e compl e tion of th e construction; ond
(5) That th e c e rvic e s to b e provid e d by th e fooility,
alone or in conjunction with othof facilitioo
owned or oporotod by tho applicant, will bo
mad e ovoiloblo for o progrom providing prinoi
pally for persons r e siding in a particular ar e a or
aroos in or noor which such focility is to bo
situated, ot least tho o s sont i ol olomonts of com
pr e h e noiv e montal health oorviooo — ii e ., oontinu
ous s e p i 'ic e o, p e riodic s e rvio es , doy/night s e r
vices (including at least day core son . 'ices),
emergency sor i 'icos provided 2 4 hours per day,
ond consultation and e ducation s e rvic e s ovoilobl e
to area ogonoieo and prof e osionol p e rsonn e l,
(g) After award of o grant fiscol records shall bo consoli
dated and mointained by the treasurer of the projoct in o
central location acc e ssible to auditors and insp e ctors of th e
D e partm e nt of Human Rooourooo.
(h) — Aftor oword of a gront tho nomo and addre s s of tho
treoflurer of tho projoct shall bo oubmittod to tho Division as
soon as o tr e oour e r is appointed.
(i) Aft e r award of a gront r e cords shoU bo dosignod and
mointflinod to reflect the purpose for which each oxpondituro
is mode.
^ — Aft e r award of a grant r e cords of th e opplicont oholl
r e fl e ct oil transactions b e tw ee n th e sponsor and contractors
and vondora and botwoon tho sponsor and tho Divioion.
(k) After oward of o grant on aooounting system shall bo
organiz e d so oo to fooilitot e auditing and pr e paration of
r e ports.
(i) — Aftor aword of a grant tho sponsor shall maintain a
record of deposits and disburoomonto on o standard form
supplied by tho Divioion.
(m) Aft e r award of o grant o sp e cial bank account shall
be established and maintained for tho uso of tho projoct
exclusively into which the local share of costs shoU bo
deposited. — Stat e and f e d e ral funds, if any, shall also b e
deposited into tho account as th e y or e r e c e iv e d. — Ch e cks for
all items of projoct costs shall bo drown on this account and
a copy of the cancolod chocks and tho invoices for which tho
ch e cks w e r e drown shall b e fil e d in ohronologioal ord e r.
(n) After award of o grant, payment inopootiono shall bo
mado by tho Division of facility s ervices of tho Dcpartmont
of Human Resources when approximately 10 pvorcent, 25
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1452
PROPOSED RULES
poroont. 50 f>orcont. 75 porcont and Q5 f > orcont of tho
oonotruotion and oquipmont aoquioition and inotallation io
compl e t e . Grant fundo ohall be dioburood after ouoh
inajxictiona l ajoh that tho total amount of funds disbursed to
tho project will bo that poroontago of tho total amount of
fundo granted to tho project oqtal to tho peroentag e of
oonotruotion whioh i o aotually finish e d. — Final paym e nt shall
bo made aftor all oonatruction is comploto and all equipment
is dohvorod and on aud i t of tho projoct records i s complotod.
(e^ — Aftor award of a grant tho proj e ct tr e asur e r shall
maintain rooordo whioh will rofloot th e amount of North
Carolina sales and use tax paid by each contractor and
sub contractor. Such tax information shall bo required to bo
suppli e d by th e oontraotor with e ach payment requ e st.
(a) When capital funds are specifically appropriated by
the General Assembly, the Division shall allocate funds for
area program capital projects. Such allocations shall be in
accordance with the language and intent of the appropria-
tion. Instructions for capital applications and payment of
funds shall be issued by the division subsequent to any such
specific appropriation.
(h) An area program may request to use state non-UCR
funds, Willie M. or Thomas S^ funds, or to transfer state
operating funds outside the regular. Willie M. and Thomas
S^ unit cost reimbursement systems for capital costs for
itself or its non-profit contract agency, in accordance with
G.S. 122C-147. In accordance with G.S. 122C-147. such
requests are limited to 24-hour and day facilities, except that
Willie M. funds may also be used for other necessary
facilities. The following procedures shall be followed:
(1) Approval for purchase, lump sum down payment
or periodic payments on a real property mort-
gage in the name of a private, non-profit corpo-
ration, alteration, improvement or rehabilitation
of real estate costing under five thousand dollars
($5.000) is delegated to the area director.
(2) Approval for purchase, lump sum down payment
or periodic payments on a real property mort-
gage in die name of a private, non-profit corpo-
ration alteration, improvement or rehabilitation
of real estate costing five thousand dollars
($5,000) or over shall be based u pon submission
of an application by the area program to the
Division Director or designee. Such application
shall be in i format prescribed by the Division
and may include the following:
(A) name of applicant;
(B) address of applicant;
(C) the name and type of proposed or existing
facility and its location;
(D) the purpose of request, whether new construc-
tion, purchase of an existing structure, alter-
ation, improvement or rehabilitation of an
existing facility;
(E) a statement of the need for the facility or
alteration, improvement or rehabilitation;
(F) description of the programs conducted or to be
conducted in the facility;
(G) target date for project completion;
£H} an estimated construction budget and projected
revenue sources;
(I) a statement indicating whether or not addi-
tional Division funds will be required for
operating costs. If this question is answered
yes, the application shall indicate the estimated
additional operating funds required and the
proposed funding source; and
(J) the name and telephone number of the area
program representative designated as contact
for the application; and
(K) two property appraisals completed by licensed
property a ppraisers for costs associated with
the purchase of an existing building, lump sum
down payments and period payments on the
mortgage of real property.
(3) Funds approved for capital projects under Para-
graph £b} of this Rule shall be paid in the fol-
lowing manner:
(A) Funds approved under Subparagraph (bMV) of
this Rule shall be requested by the area pro-
gram using regular fund request procedures as
funds are needed.
(B) Funds approved under Subparagraph (bM2) of
this Rule shall be requested in the following
manner:
(i) if funds are to be utilized for the purchase
of a facility, the necessary funds may be
requested within 30 days from when they
are needed via a written request from the
Area Director to the Division Director or
designee. The request shall specify the
amount of funds needed and the projected
closing date of the purchase,
(ii) if funds are to be utilized for the construc-
tion of a new facility or renovation, reha-
bilitation or alteration of an existing facil-
ity, funds will be disbursed based upon
written requests from the Area Director to
the Division Director or designee certify-
ing project completion at the following
intervals: 10%. 25%. 50%. 75% and
100%. Upon receipt of such billings, the
Division shall issue payment consistent
with the percentage completed.
(4) All aspects of any capital project shall be com-
pleted in accordance with all a pplicable federal.
State and local regulations. Such compliance
shall include, but not be limited to, G.S. 159
requirements. Division of Facility Services
licensure regulations, local building ordinances,
etc.
(5) The area program shall maintain a perpetual
inventory of all facilities purchased, constructed,
altered, renovated or rehabilitation in accordance
1453
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
m-
)
Current Asoeto Por Audit R e port
Loas! — Liabilitios Por Audit Rop>ort
Fund Balanco
L e oo: R e o e rs' e for Enoumbrano e o
with this Rule. This inventory shall document
the history cost of the facility plus subsequent
improyements and the percentage of Diyjsion
participation in the total cost.
(6) Should the facility cease to be used for the
purpose of serving clients of the Djyision. or,
more specifically for the purpose of serving
Willie M. or Thomas S^ clients if the purchase,
construction, rehabilitation, alteration or im-
provement was funded from those specific
funding sources, the Division shall be contacted
immediately for disposition instructions. If the
Division so directs, the facility shall be sold at
the current fair market value in accordance with
G.S. 153A-176 and G.S. 160A-266. After the
sale, the Division shall be reimbursed the Rosorvo for Inventory
Division's pro-rata share of the proceeds from
the sale based on the percent of contribution
made by the Division for die purchase, construc-
tion, alteration, improvement or rehabilitation of
the sold facility. If an area program or its
contract provider wishes to maintain ownership
of a facility that was constructed, purchased,
altered, improved or rehabilitated using Division
funds, the area program or non-profit contract
provider may, if authorized b^ the Division, pay
to the Division the Division's pro-rata share of
the current fair market value of the facility as
determined by two independent appraisals ac-
ceptable to the Division.
rondorod.
To dotormino the unrootriotod fund balonoe and
th e perc e nt that it roproeonto to th e op e rating
budget, the Divioion oholl uoo the following
formnt !
-f-
R e s e rv e for Patiento Aooounto R e c e ivabl e
LoflS! Allowonco for Doubtful Accounts Patient
Accounts Receivable ( ) ( -
Reoor^'e for Aooounto R e c e ivabl e from
Govommontal Entiti e o (-
Roflon i 'o for BUT Foe s
R e o e rs' e for Drug Education School Fooo
-e-
R e o e r^' e for R e otriot e d Donations (—
Fund Balance Restriction Proviouoly Approved by
DMH/MR/SAS (Prior to February 1, 19 8 6.) (-
Oth e r(Li6t)
-e
Unrestricted Fund Balance
Annual approv e d budg e t pluo approv e d budget
revisions as of September 30
P e rc e nt Unr e stricted Fund Balance to Current
i\nnual Budg e t
p e rc e nt
Statutory Authority G.S. 122C-112; 122C-113.
.1125 FUND BALANCE: AREA PROGRAMS/
CONTRACT PROGRAMS
(a) In order for the Division to have input into the actions
regarding fund balances in area programs and contract
prognuno ao provided for in Rule . 101 1 of thio Subchapter,
the following shall tak e plac e aft e r th e c e rtifi e d public
accountant's audit report is rendered and the tentative
settlement report prepared;
(4^ Th e fund balance s e t forth within th e annual
audit of area programo and contract progra ms
shall bo verified by the Divioion.
(3) Since single county area progroma are consid
e r e d a d e partm e nt of th e county for budg e tary
and financial r e porting, separat e fund balano e o
for the single county area programs are not
required. — In order to assure that single county
area programo ar e in compliance with G.S.
122C 146 which stat e s that fe e s rec e ived for
services shall not reduce or replace the budgeted
commitment of local tax revenue, the Division
shall review th e utilization of county g e n e ral
funds and the disposition of foes receiv e d for
aor^'ioo each year. — This review shall occur after
the annual audit report for the county has been
^4r) If the unrestricted fund balance is not in exces s
of 15 p e rc e nt of th e curr e nt onnuiil budget, no
action io to take place.
(5) If the unrestricted fund balance is over 15
percent of the current annual budget, the Divi
oion oholl r e duc e ito allocation of divioion funds
in th e y e ar oubo e qu e nt to th e y e ar in which the
excess occurred,
(b) The amount of reduction of financial s upport by the
divioion to ar e a programs and contract programa ao r e f e r
e nc e d in (a) (5) of this Rul e may bo decreas e d and/or
delayed if thoro are extenuating circumstanoo s which, in the
opinion of the Division Director, warrant relaxation of this
policy. Any action tok e n in r e gard to (b) of thio Rul e shall
b e docum e nt e d in writing.
Statutory Authority G.S. 122C-1 12(a)(6);
122C-146; 122C-147; 143B-10; 159-8.
122C-144;
. 1 126 FUNDING GROUP HOMES FOR
MENTALLY RETARDED CHILDREN
(«) Pursuant to G.S. — 122C 117, the Division shall
adminiot e r a program of grants to ar e a programs to b e
called funds for group bomoo for mentally retarded children.
(b) Such grants shall bo used to s upport group homos for
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1454
PROPOSED RULES
montxilly retarded childron.
(o) To bo oligiblo for fundo for group hom e o for m e ntally
retard e d childr e n, th e oommunity shall provid e r e sid e ntfl
with a total array of oorviooo and programo to moot their
varioua ncxida and Icvolo of capability and not just 2 4 hour
car e . — Tli e c e programe shall promot e a compl e t e lif e for
thoQO individualo in a oommunity o e tting.
(d) Funda for group homos for mentally rotardod childron
shall be adminiotcrcd to area programs as direct grants and
do not requir e local matching.
(o) Programt) operated by an ar e a program or non profit
programs subcontracting through the area program are
eligible for funding of the follosving expondituroo:
fl^ staffing for client sorviceo;
(3^ trav e l;
(^^ supplies;
{4j administrative and program equipment;
f§9 rent or l e as e of a facility;
(4^ other program needs as approv e d by th e Divi
sion; and
f?3 the purchase. — construction or alteration, — \m-
provomont or repair of a facility by th e ar e a
program or a non profit board with division
approval . — The program shall meet the require
monts of the following:
(A^ — The Group Hom e Mortgage Payment Program.
The Division may participat e in th e mortgag e
payment program in part or In total dependent
upon the availability of state funds.
(B) — Th« — Group — Hom e — Purohao e /Construotion
Program.
fi^ The Division may participate in the down
payment or lump sum purchase or con
otruotion of a group hom e in whol e or part
conting e nt upon the availability of stat e
funds.
(+i) The area program or non profit board shall
s e cur e two prop e rty appraisals for r e vi e w
and approval by th e Division prior to
purchase.
(iii) — If a new construction grtmt i s requested,
the ar e a program shall submit two con
struotion bid oontraoto from two building
contractors — te — the — appropriate — regional
office for review and approval prior to
construction bid l e tting.
{G) — A r e qu e st for initial r e novation of a n e wly
acquired — facility — of five — thousand — dollars
($5,000) or less shall be submitted to the
appropriate regional offic e of th e Division for
approval. — Initial minor r e pairs to faciliti e s of
less than one thousand dollars ($1,000) shall
be approved by the area program.
{©) — A r e qu es t for alt e ration or improv e m e nt of an
e xi s ting facility in e xo e oo of fiv e thousand
dollars. ($5.(XX)) shall be for . varded to the
Division Director's office through the appro
priato regional offioo of the Division fof ap
proval .
(E) — Each r e qu e ot as outlined in ( e )(7)(B) and (D)
ef-t hio Rule shall bo aooompaniod by a narra
tive that explains the noed for the purchase,
oonstruotion, alteration, improv e m e nt or r e pair
of th e facility and a oopy of the ooh e matio
drawings and specification s . — If approved by
the Division of Mental Health, Mental Retar
datioD and Subotanoe Abus e S e P i 'iooo, thoo o
drawings and sp e oifioationa shall bo forwarded
to the Division of Facility Sor i 'icoa for review
and approval.
(F) — If th e group hom e is operat e d by a non profit
board, the area program shall sign a l e gally
binding contract with the private non profit
agency for either the mortgage payments to bo
mad e or th e purchas e or construction program
00 indicated in (A) and (B) of (q)(7) of this
Rule. A copy of the appropriate contract shall
bo obtained from the oontroUer'a offioo of the
c e ntral offic e of th e Divioion.
(G) — If a facility own e d by on ar e a program or its
private non profit contract agency was pur
ehoQod, — altered, — improved, — or rohabilitatod
tifling division funds and lat e r ooaooo to b e used
in th e d e liv e r)' of s e n i 'io e o to oli e nto by tho
area program or its private non profit oontract
agency, tbo facUity shall bo sold at the current
fair mark e t valu e as d e t e rmin e d by two ind e
pondont appraisals acc e ptabl e to tho Divioion.
TTio Division shall bo reimbursed a pro rata
share of the proceeds of the sale baood on tho
perc e nt of oontribution mad e by th e Division
in th e purchao e , alt e ration, improv e m e nt or
rehabilitation. — The area program shall main
tain records on a continuous basis which
r e fl e ct th e amount of contribution for pur
ohos e , alt e ration, improv e m e nt, or r e habilita
tion by the Division, area program or other
funding entity.
f^ — Fund Balanc e .
f4-) Th e Divioion may allow group hom e o for men
tally retarded children to maintain a fund balance
of no more than 15 percent of the curr e nt annual
budg e t for th e group homo.
(S^ Th e 15 perc e nt fund balance shall bo generated
entirely by non state fiinds.
(5) Tho Division may decrooso state appropriation to
a group hom e , th e r e by necessitating th e group
hom e to utilize its fund balanc e , if th e stat e
appropriation is required in order to continue
operations at anothor homo.
(4) Th e 15 p e rc e nt fund balanc e allow e d shall b e in
addition to th e amount th e Division would allow
to remain in the fund balance duo to restricted
donations.
1455
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
(5) Except for the rostrictod donationo and tho 15
poroont fund balanoo, funds for group homoo for
montally r e tarded ohildron ohall bo exp e nd e d
\n nt
(^) i\n allowance for a fund balance for group
homeo that ar e operated by an ar e a program is
made in Rul e .1135 of thio S e otion.
(g) — To apply for funda for group homoo for mentally
retarded children, an annual plan and budget for auoh funda
shall b e includ e d in th e appropriate ar e a program'o total
annual plan and budget package when it io oubmitted to th e
appropriate regional office of the Division.
(h) Fundo for group homos for montally retarded childr e n
ohall b e allooatod among tho rogiono of tho Di^'ioion by th e
Divioion Director.
(i) Baood on tho approved annual plan and budget request
submitted and availability' of fundo, allocation of funds for
group homoo for montally retarded childr e n to ar e a pro -
gramt) within e ach r e gion shall b e mad e by the Division
Director or his designee.
Statutory Authority G.S. 122C-1 12(a)(6); 122C-147.
.1127 GROUP HOMES FOR MR/BEHAVIORALLY
DISORDERED PERSONS
(a) Tho Divioion ohall adminiot e r a program of granto to
programo to b e called fundo for group homeo for mentally
retarded and beha' i 'iorally disordered person s .
(b) Such granto shall be used to support group homoo for
montally retarded and b e haviorally disord e red poroono.
(o) To b e e ligible for fundo for group hom e s for m e ntally
retarded and behaviorally diaordored poraono, — tho area
progmm shall provide a total army of services and programs
to m ee t the activ e tr e atm e nt and behavioral programming
needs of each cli e nt on a 24 hour daily baoio. — Th e s e
programs shall attempt to increase socially acceptable
behaviors and decrease inappropriate behaviors to the extent
that olionto may enter a more normaliEed o e tting following
termination from th e op e oialia e d group hom e plac e m e nt.
(d) — Funda for group homos for montally retarded and
boha' i 'iorally disordered persons shall bo administered to
ar e a programs as dir e ct granto and do not r e quir e local
matching.
(e) — Programs may spend funds for group homes for
montally retarded and behaviorally disordorod peraona for
th e following:
(4) to rent or loaoo facilities;
(3) furniture or spociahzed equipment for residents;
(3) transportation of rosidonta;
(4) other neooooary operating e xp e ns e s ao approv e d
by th e Divioion; and
(§) the purchase, construction, alteration, improve
ment or repair of a facility by the area program
or a non profit board with divioion approval.
Th e program shall m ee t th e following r e quir e
monts!
(A) — Tho Group Home Mortgage Payment Program.
Tho Division may participate in the mortgage
payment program in part or in total d e p e nd e nt
upwn tho availability of state fundo.
(B) — The — Group — Heeae — Purchase/Construction
Program.
(i) Th e Divioion may participat e in th e down
paym e nt or lump sum purchaoe or con
struction of a group home in whole or part
contingent upon tho availability' of state
fundo.
(ii) Th e area program or non profit board shall
secure two proport)' appraisals for review
and approval by the Divioion prior to
purchao e .
(iii) — If a now construction grant io r e qu e ot e d,
the area program s hall s ubmit tv ^ 'o con
struction bid contraoto from tv » 'o building
contraotoro to th e appropriate regional
office for r e view and approval prior to
construction bid lotting.
(€) — A request for initial ronovation of a newly
acquir e d — facility — of fiv e — thou i and — dollars
($5,000) or l e oo ohall b e oubmitt e d to th e
appropriate regional office of tho Divi s ion for
approval. — Initial minor repairs to facilities of
l e oo than on e thouoand dollaro ($1,000) ohall
b e approv e d by th e ar e a program.
(B) — A request for alteration or improvement of an
existing facility in excess of five thousand
dollars ($5,000) shall b e forward e d to th e
Divioion Dir e ctor's offic e through the appro
priato regional office of tho Division for ap
proval.
(^ — Each requ e st ao outlin e d in ( e )(5)(B) and (D)
of thio Rule ohall be aooomponi e d by a narra
tivo that explains tho need for the purchoflo,
construction, altemtion, improvemont or repair
of th e facility and a copy of th e ooh e matio
drawings and op e oifioationB. — If approv e d by
the Divi s ion of Mental Health, Mental Rotar
dation and Subotanoo Abuoo Sor^'icos, thooo
drawings and op e oifioationo shall b e forv ^ 'ardod
to th e Division of Facility S e rvio e o for r e vi e w
and approval.
(F) — If the group home is operated by a non profit
board, th e ar e a program ohall sign a l e gally
binding contract with the private non profit
agency for either the mortgage payments to bo
made or tho purchase or construction program
ao indicated in (A) and (B) of (e)(5) of thio
Rul e . A copy of th e appropriat e contract shall
bo obtained from the controller's office of tho
central office of the Division.
(6) — If a faoilit)' own e d by an ar e a program or its
privat e non profit contract ag e ncy was pur
chased, — altered, — improved, o r rc j iabilitatod
using division funds and later coaoos to bo used
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1456
PROPOSED RULES
in the delivery of sop i 'icoo to olionto by the
aroQ program or ito private non profit oontraot
agonoy. th e facility shall be cold at th e ourr e nt
fair market value as determined by two inde
pendent appraiaals acceptable to the Division.
Tho Div i oion shall b e roimburo e d a pro rata
share of the proooedo of th e oalo bac e d on th e
porcont of contribution made by tho Division
in the purchase, alterat i on, improvement or
rehabilitation. — TTie area program ohall main
taifl — reoordo — on a continuouo baoio which
rofloct tho amount of contribution for pur
chase, altorntion, improvement or rohnbilitation
by tho Divioion. area program or oth e r funding
ontit)'.
(f) Fund Balance.
f4^ Tho Division may allow group homos for mon
tally r e tard e d and b e haviorally disordorod per
oono to maintain a fund balanc e of no more than
15 percent of tho current annual budget for tho
group homo.
(3) Tho 15 percent fund balance shall bo generated
entirely by non stat e funds.
(3^ Tho Division may docroaso state appropriation to
a group homo, thereby necessitating the group
home to utiliz e its fund balanc e , — if the stat e
appropriation is r e quired in ord e r to continu e
op>orations at another homo.
( 4 ) The 15 porcont fund balance allowed shall bo in
addition to th e amotint th e Divioion v . 'ould allow
to remain in tho fund balanc e duo to rootriotod
donations.
(S^ Exoopt for tho restricted donations and tho 15
percent fund balanc e , fiindo for group hom e s for
m e ntally r e tard e d and b e haviorally disord e r e d
persons shall bo oxpondod last.
(€) An allowance — for a fund balance — for group
hom e s that ar e op e rated by an ar e a program is
mad e in Rul e . 1125 of this S e ction.
(g^ — To apply for funds for group homes for mentally
natardod or behaviorally disordered persons, an annual plan
and budg e t for ouch funds s hall b e includ e d in th e appropri
ate area program's total annua l plan and budg e t packag e
when it is submitted to tho appropriate regional office of tho
Division.
fh) — Fund s for group homeo for mentally retarded or
behaviorally disord e red p e rsons ohall b e allocat e d among th e
regions of the Division by the Divis i on Director.
(i) Ba s ed on the approved annual plan and budget request
submitt e d and availability of funds, allocation of funds for
group hom e s for m e ntally r e tard e d or b e haviorally dioor
dered pwrsons to area programs w i thin each region shall bo
made by tho Divi s ion Director or his designee.
Statutory Authority G.S. 122C-1 12(a)(6); 122C-147.
.1128 APARTMENT LIVING FOR MENTALLY
RETARDED ADULTS
(a) Pursuant to G.S. 122C, th e Division ohall adminiotor
a program of grants to programs to bo call e d apartment
living for mentally retarded adults.
(b) Such granta shall bo used to support apartmont living
for m e ntally retard e d adults.
(o) Adults in whos e b e half funds ar e administ e r e d to
programs shall be;
fH 1 8 yoars of ago or oldor; and
(3) r e sid e nts of North Carolina.
f4) — Funds for apartm e nt l i ving for mentally r e tarded
adults shall bo administered to programs as direct grants and
do not require l ocal matching.
fe) — Programs may spend funds for apartm e nt living for
m e ntally r e tard e d adults for th e following:
(1) rental or leasing of facilitiog;
(3) furniture or spocializod equipment for roaidepts;
(^) transportation of rooidonto;
f4^ op e rational e xp e ns e s to include but not bo lim
ited to: food, utilities, housokooping supplies,
insuranoo and bond, professional sor^'icoa;
(5) staff salaries;
(#) staff training;
f?) resident dental and modical needs;
( 8 ) repairs — and — maintenance — of facilities — which
r e pr e s e nt normal upkeep and do not materially
inor e oo e th e valu e of th e faoilit)' or e xt e nd ita
useful l i fe;
(9) to participate in a federal Department of Houa
ing and Urban D e v e lopm e nt (HUD) Sootion 202
proj e ct (12 U.S.C. § 17Qlq) for tho purohaco,
construction or alteration, improvomont or repair
of Q facilit)' with division approval. Tho program
shall meet th e following roquir e m e nto:
(A) — Th e ar e a program may r e qu e st funds for this
project from the division. The Division may
participate in tho HUD Section 202 project
conting e nt upon th e availability of state funds.
(B) — Th e area program shall sign a legally binding
contract with a private non profit agonoy to
9p>ocily' that if the facility coooos to be used in
th e d e liv e r)' of o e P i 'io e o to tho oli e nto, th e
privat e non profit ag e ncy shall r e imburs e th e
Division according to tho following roquiro
monts:
(i) If tho facility is sold, it should bo sold at
th e current fair mark e t valu e as d e t e rmin e d
by tv i 'o indopendont appraisals aoooptablo
to the Division and tho Division shall bo
r e imburs e d a pro rata oharo of tho selling
pric e of th e facility bao e d on tho oontribu
tion made by tho Division in the purchaao,
construction, or altemtion, improvomont or
r e pair of th e facility.
(it) If th e facility is r e tained by th e private
non profit agency, the Divioion shall bo
reimbursed a pro rata share of tho current
1457
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
faif markot value of tho facility' aa dotor
min e d — hy — twe — ind e p e nd e nt — appraioalo
aoooptablo to th e Divioion boo e d on th e
contribution made by tho Division in tho
purchaBO, — construction, — er — alteration,
improv e ment or r e pair of th e faoilit)'.
(G) — Th e ar e a program oholl maintain a r e cord
which roflocta tho amount of contribution made
by tho state for purchase, construction, or
altorotion, improvement or ropair to th e faoil
fiO) other nocos9ar>' operating oxponsos aa approved
by the Divioion.
(f) To apply for fundo for apartm e nt living for m e ntally
retarded adultc, on annual plan and budget for such funds
shall bo included in tho appropriate program's total annual
plan and budget package when it is submitted to tho appro
priato regional offioo of the Division.
(g) — Funds for apartm e nt living for mentally r e tard e d
adults shall be allocated among the regions of tho Divi s ion
by tho Division Director.
(h) Baood on tho approved annual plan aad budg e t roquoot
submitt e d and availability of funds, allocation of fundo for
apartmont living for mentally retarded adults to programs
within each region shall bo made by the Division Director
or his deoigneo.
Statutory Authority G.S. 122C-1 12(a)(6); 122C-147.
.1129 SUBSTITUTE FAMILY CARE
(a^ — Pursuant to G.S. 122C 113, and 122C HT, th e
Division shall administer subsidy roimburBomonts to area
programs to bo called substitute family care r
(b) Suoh subsidy r e imburoomento shall be uood to provide
for the establishm e nt of nurturing and dovelopmentally
stimulating foster care for montally retarded children placed
by county dopartmonto of social oor . 'iooQ. — Tho focus of
substitute family car e programs shall e xt e nd b e yond room
and board into tho provision of a hom e lik e e nvironm e nt that
provides developmental training.
(e^ — Persons in whoso behalf funds aro reimbursed shall
(i) r e sid e nts of North Carolina;
(3) in licensed foster homos approved by county
departments of social services;
(3) botv i 'eon th e ag e s of birth and 1 8 , unl e ss other
wise approved by th e county d e partm e nt of
social sop i 'ices.
(d) To apply for substitute family care subsidy reimburse
m e nt, on annual plan and budg e t for suoh fundo shall b e
includ e d in th e appropriate area program's total annual plan
and budget package when it is submitted to the regional
office of tho Division.
( e ) Substitute family oare subsidy reimburoom e nts shall b e
allocat e d among th e r e gions of the Division by th e Division
Director or his dosignoo.
f^ — Based on tho annual plan and budget submitted and
availability' of funds, allocation of substitute family oare
subsidy r e imbursomentc to area programs shall b e approv e d
by th e Divioion Dir e ctor or his d e oignoe.
Statutory Authority G.S. 122C-112; 122C-147.
.1130 RESPITE CARE
(a) Pursuant to G.S. 122C 1 4 7, the Division shall
administer a program of grants to area programs to bo
call e d r e spite fundo. R e opite fundo shall b e administ e r e d as
dir e ct grants not requiring match. — R e opite sor . 'iooo shall bo
provided on a planned or omergoooy basis for a pwriod of up
to thirty days, to eotablioh reopite euro aorvieoa for familioa
of m e ntally retard e d individuals.
(b) Programn op e rat e d by an ar e a program or non profit
progroma subcontracting through tho area program are
eligible for funding of the following oxpondituroa:
{¥) s taffing for cli e nt o e rvioes;
(3) trav e l;
(3^ supplies;
(4) administrative and program equipment;
other program neodo ao approv e d by tho Divi
(5)-
program
(6) rent or loaoo of facility;
^ other neceosar)' operating expenses as approved
by the Divioion; and
(8) th e purohoc e , oonstruotion, alt e ration, improv e
mont or ropwir of a facility by the area program
or a non profit board with division approval.
Th e program shall meet the r e quirem e nts of th e
following:
(A) — Tho Group Homo Mortgage Payment Program.
Tho Division may participate in tho mortgage
paym e nt program in part or in total dependent
upon th e availability of stat e funds.
(B) — The — Group — Home — Purchaao/Construction
Program.
(i) Th e Divioion may participate in th e down
paym e nt or lump oum purohao e or con
struction of a group home in whole or part
contingent upon the availability of state
funds.
(«) Th e ar e a program or non profit board shall
secure two property' appraisals to tho
appropriate regional office for review and
approval by th e Divioion prior to pur
chas e .
(tit) — If a now construction grant is requested,
the area program shall submit tv ^ 'o con
Btruotion bid contracts from tsvo building
contractors — to th e appropriate — r e gional
offioo for review and approval prior to
construction bid lotting.
(€) — A r e quest for initial renovation of a n e wly
acquired — facilit)' — of fiv e — thousand — dollars
($5,000) or loss shall be submitted to tho
appropriate regional office of tho Division for
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1458
PROPOSED RULES
approval. — Initial minor ropairo to faoilitioa of
looo than one thouoand dollaro ($1,000) ohall
bo approv e d by th e ar e a program.
(B) — A roquoot for altoration or improvemont of on
existing facility in oxcoos of fivo thouaand
dollars ($5,000) ohall bo forv ^ 'ord e d to th e
Divioion Dir e ctor's offic e through th e appro -
priate regional office of the Division for ap
proval.
(^ — Each r e quoot an outlin e d in (b)( 8 )(B) and (D)
of thio Rule ohall b e aooompanied by a narra
tivo that explains the nocd for tho purchoflo,
conatruction. alteration, improvemont or repair
of th e facility and a copy of th e ooh e matio
drawingo and sp e cifioationo. — If approv e d by
tho Division of Montd Health, Mental Rotar
dation and Substance Abuse Sor^'ieos, thooo
drawingo and DfKwifioationfl ohall b e for * 'ard e d
to the Divioion of Faoilit)' Sorvio e e for r e vi e w
and approval.
{¥) — If tho group home is operated by a non profit
board, th e area program ohall sign a legally
binding oontraot with th e private non profit
agency for either tho mortgage payments to b e
made or the purchase or construction program
ao indioatod in (A) and (B) of (b)( 8 ) of thio
Rule. A copy of th e appropriate oontraot ohall
bo obtained from the controllor's office of tho
central office of the Divioion.
(S3 — If a facility owned by an area program or its
private non profit oontraot ag e ncy woo pur
chased, — altered, — improved, — or rehabilitated
using division funds and later coosos to bo used
in tho deliv e r)' of s e r i 'iooo to oli e nto by th e
area program or ito private non profit oontraot
agency, tho facihty shall bo sold at tho current
fair market value as doterminod by two indo
p e nd e nt appraioalo acc e ptabl e to th e Division.
TTio Divioion shall b e reimbursed a pro rata
share of tho proceeds of tho sale bosod on the
p>orcent of contribution made by tho Division
in th e purchas e , alt e ration, improv e m e nt or
rehabilitation. — Th e ar e a program shall main
tain records — on a continuous basis which
reflect tho amount of contribution for pur
ohoo e , alt e ration, improv e m e nt, or rohabilita
tion by th e Divioion, ar e a program or oth e r
funding entity.
(e) — Fund Balance.
(4) TTie Division may allow group homes for rooi
d e ntial non profit r e spit e programs to maintain
a fund balance of no more than 15 percent of the
current armual budget for the group home.
(33 Th e 15 p e rc e nt fund balanc e shall b e g e n e rat e d
e ntir e ly by non stat e funds.
(5) Tho Division may decrease state appropriation to
a group homo, thereby necessitating tho group
home to utilize its fund balanoo, if tho state
appropriation i s r e quir e d in order to oontinue
op e rations at anoth e r hom e .
(4) The 15 poroont fiind balance allowed shall bo in
addition to the amount the Division would allow
to r e main in th e fund balanoo du e to r e otriotod
donationo.
(5) Except for tho reotriotod donations and tho 15
percent fund balance, funds for residential non
profit r e spit e program shall b e e xpended loct.
(6) An allowonoo — for a fund balanoo — for group
homos that are operated by an area program is
made in Rule . 1 125 of this Section.
(d) Reopito fundc shall b e allocat e d among tho rogiono of
th e Division by th e Division Dir e ctor or his d e sign ee .
(o) To apply for respite funds, an annual plan and budget
for such funds shall bo included in the appropriate area
program's total annual plan and budg e t packag e submitted
to tho r e gional offio e of th e Division.
(f) Booed on the approved annual plan and budget roquoat
submitted and availability of funds, allocation of respite
funds to ar e a programs shall bo approved by tho Division
Dir e ctor or his deoignoo.
Statutory Authority G.S. 122C-1 12(a)(6); 122C-147.
.1131 FUNDS FOR COMMUNITY ALCOHOL
PROGRAMS IN WESTERN N.C.
(a) In furthoranoo of G.S. 122C 112 and 122C 147, tho
Envision shall administer a progmm for th e chronic alcohol
ios of w e st e rn North Girolina.
(b) Thoso special appropriated legislative funds shall bo
used to dovolop a long term treatment program for chronic
alcoholics of th e w e stern r e gion. Such a program is e ligibl e
for funding of th e following e xp e ndituroo:
(i) s taffing for client sop i 'icos;
(3) travel;
(3) oupplioo;
(4) adminiotrativ e and program e quipm e nt;
(5) other program needs aa approved by tho Divi
sioni and
(6) r e pairs — and nmint e nano e — of faoiliti e o — v i 'hioh
roproGont normal upk ee p and do not materially
incrottoo tho value of the faeility or extend ita
usoful life. — Thoso special appropriated funds
ohall not b e us e d for purchas e or conotruotion of
r e al prop e rty.
(c) Thoso special appropriated legislative funds shall bo
administerod by the appropriate region to match federal and
local funds of th e program for th e ohronio alooholioo.
(d) For a program to apply for th e s e sp e cial appropriat e d
legislative funds, an annual plan and budget for such funds
shall bo included In the appropriate area program's total
annual plan and budg e t package when it is submitt e d to th e
appropriat e r e gional offio e of th e Divioion.
(e) — Allocations shall bo made by the Director of tho
Division or his dosignoo.
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PROPOSED RULES
Statutory Authority G.S. 122C-112; 122C-147.
.1133 FUNDING ALCOHOL AND DRUG
EDUCATION TRAFFIC SCHOOLS
(a) Pursuant to G.S. 20-179.2 the Department of Human
Resources shall have the authority to approve programs,
budgets and contracts with public and private governmental
and non-governmental bodies for alcohol and drug education
traffic schools operated by an area program or operated by
a contractor through a contract with an area program.
(b) Fees paid by persons enrolling in an alcohol and drug
education traffic school established pursuant to G.S.
20-179.2 shall be used to support the schools except as
indicated in (e) of this Rule. Other funds to support the
schools may come from multiple sources such as, but not
limited to, county general funds, state appropriations,
federal appropriations, and receipts for services (patient
fees). This Rule is established to set accounting require-
ments for the fees received pursuant to G.S. 20-179.2.
(c) Fees received pursuant to G.S. 20-179.2 shall be
limited to purchases of the following:
(1) to rent or lease space to conduct alcohol and
drug education traffic school classes if sufficient
space is not available In area program facilities;
(2) personnel and support costs necessary to assure
a systematic and timely processing of referrals to
alcohol and drug education traffic schools;
(3) suppUes and materials necessary for the efficient
and timely ojjeration, evaluation and administra-
tion of alcohol and drug education traffic schools
and for developing and maintaining an efficient
liaison process with the judicial system, inter-
ested community groups, the Division of Motor
Vehicles and the Department of Human Re-
sources;
(4) non-administrative equipment necessary for the
operation of alcohol and drug education traffic
schools;
(5) administrative equipment for alcohol and drug
education traffic school personnel employed
full-time and a pro-rated amount for personnel
assigned less than one hundred percent of the
time to traffic schools;
(6) renovations that do not result in the acquisition
of real property by the area program;
(7) travel;
(8) area program administrative costs that can be
documented as chargeable to the schools; and
(9) other necessary operating expenses as approved
by the Division.
(d) Fees received pursuant to G.S. 20-179.2 shall not be
used for acquisition of real property by the area program.
(e) Fees received pursuant to G.S. 20-179.2 shall be used
to support the operation, evaluation and administration of
the alcohol and drug education traffic schools to the extent
that the schools are fully accredited by the Division. Any
excess fees received pursuant to G.S. 20-179.2 are to be
used to continue or to expand alcohol and drug services.
(f) Fees received pursuant to G.S. 20-179.2 shall not be
used in any manner to match state or division funds or to be
included in any computation for state or division formula
funded allocations.
(g) Fees received pursuant to G.S. 20-179.2 shall be
consistently identified as such. All such fees remaining at
the end of the area program's fiscal year shall retain their
identity and the fund balance of the area program shall be
so restricted as to assure continued use of the fees for the
alcohol and drug education traffic schools or to continue or
to expand other alcohol and drug abuse services.
(h) Area programs shall maintain records which indicate
which individuals have paid for the traffic schools.
(i) Pursuant to G.S. 20-179.2, area programs shall
receive fees from either the person convicted or from the
judiciary. The individual enrolled in the school shall pay
the fee to the area program providing the school, except that
if the clerk of court in the county In which the person is
convicted agrees to collect the fees, the clerk shall collect all
fees for persons convicted in that county. The clerk shall
pay the fees collected to the area program serving the
catchment area in which the clerk is located regardless of
where the defendant attends the school.
(j) Area programs receiving fees from the judiciary for
individuals who will be enrolled in schools operated by
other area programs shall transfer 80 percent of the fees
received from the judiciary for those individuals to the area
programs enrolling the Individuals up>on receipt of an
invoice. The 80 percent shall be transferred to the area
program providing the school regardless of whether the
Individual attends the school.
(k) Area programs receiving fees directly from an
individual who has been convicted in a county outside the
area program's catchment area shall transfer 15 percent of
the fees collected to the area program which serves the
county where the individual was convicted upon receipt of
an invoice from the area program serving the county where
the conviction occurred. Any area program not desiring to
collect the 15 percent from another area program is not
required to invoice that program. A decision not to collect
the 15 percent shall be approved by the area board and
documented in the board minutes. An area program that
does not desire to invoice another area program shall honor
invoices presented to it from other area programs that desire
to collect the 15 percent.
(1) Five percent of all fees received by the area program
pursuant to G.S. 20-179.2 shall be forwarded to the Depart-
ment of Human Resources on a monthly basis. The area
program that initially receives the fees from the persons
paying the fees or from the judiciary system shall be
responsible for transferring the 5 percent to the Department.
Checks shall be made payable to and sent to: Division of
Mental Health, Mental R e tardation Developmental Disabili-
ties and Substance Abuse Services, Fiscal Services Section.
Controllor'fl Offioo, Suite 1103 612 , 325 North Salisbury
Street, Raleigh, North Carolina 27611 27603-5906 .
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NORTH CAROLINA REGISTER
November 1, 1995
1460
PROPOSED RULES
(m) The amount of fees transferred to another area
program or to the Division as indicated in (j) through (1) of
this Rule shall be recorded in the accounting records to
account number 97 TRANSFER OF DUI FEES. Under no
circumstances shall the transfer of fees be recorded as an
operating exf)ense in which the Division would participate.
(n) In ordar to sooure appro' . 'al of the program and budg e t
supported by fcoo rocoivod pursuant to G.S. 20 179.2. the
area progmm shall include the programmat i c and budgotar)'
data in the annual plan of work submitt e d to th e Division
oaoh Fiooal y e ar.
Statutory Authority G.S. 20-179.2; 122C-143; I43B-10.
.1134 FUNDS FOR MULTIDISCIPLINARY
EVALUATIONS: GUARDIANSHIP
(a) To the extent state funds are available, the division
shall provide reimbursement for court-ordered
multidisciplinary evaluations of indigent persons in guardian-
ship procedures under G.S. 35 1.16 35A-116 . The cost of
the evaluation shall be borne by the respondent unless the
respondent is indigent.
(b) Area programs, other local agencies and private
practitioners are eligible for reimbursement.
(c) To obtain reimbursement the area program, other
local agencies or private practitioners shall submit to the
appropriat e — regional — offic e Division Fiscal Office the
following:
(1) fettf two copies of an itemized invoice which
reflects the following:
(A) name of respondent evaluated,
(B) name of the evaluator for each respondent,
(C) amount of time in hours or portion thereof
required for each evaluation and report prepa-
ration,
(D) rate per hour for each evaluation, and
(E) dollar amount for each evaluation.
(2) three copies one copy of the individual court
order. The copi e s of th e court order shall be
attached to the invoice required in (o)(l) of this
Rule so that throe of the four oopioo of the
invoic e hav e a copy of th e court ord e r attach e d .
(d) Determining Rate Per Hour.
(Ij For area programs, the rate per hour required on
the invoice under Part (c)(1)(D) of this Rule
shall be the usual and customary charges of the
area program before adjustment to the sliding
fee scale.
(2) For providers other than area programs the rate
per hour shall be the usual and customary charge
or their Medicaid reimbursement rate whichever
is less.
(e) — The regional office shall review the invoices and court
ord e rs to d e termin e that all r e quir e m e nts in (o) of this Rule
ha' . e boon mot. — If th e invoic .e s ar e in order and th e r e gional
office has uncommitted multidisciplinary evaluation funds,
the invoices shall bo initial e d for approval by the Regional
Director or regional accountant and forwarded to the fiscal
oorviooQ Goot i on of th e Divioion for paymont.
(e) f^ The procedures in this Rule apply only to reim-
bursement for evaluations to determine the necessity of
appointing a guardian for an individual and do not apply to
reimbursement for any treatment determined to be necessary
as a result of the evaluation.
Statutory Authority G.S. 122C147.1; 143B-10.
.1135 FUNDS FOR FORENSIC SCREENING:
CAPACFTY TO PROCEED TO TRIAL
(a) To the extent state funds are available, the division
shall provide reimbursement for court-ordered screening and
evaluation of persons to determine their capacity to proceed
to trial.
(b) The screening or evaluation shall be performed by a
qualified mental health professional or a qualified substance
abuse professional who is registered with the Division as a
forensic evaluator or a {>erson deemed a medical exjjert by
the court.
(c) Only area programs are eligible for reimbursement.
(d) To obtain reimbursement the area program shall
submit to the appropriate regional office Division Fiscal
Office the following:
(1) foHf two copies of an itemized invoice which
reflects the following:
(A) name of respondent screened or evaluated;
(B) name of certified forensic evaluator for each
respondent;
(C) amount of time in hours or portion thereof
required for each screening examination or
evaluation;
(D) rate per hour for each examination or evalua-
tion; and
(E) dollar amount for each examination or evalua-
tion.
(2) thr ee oopieo one copy of the individual court
order. TTie oopioo of the court order shall be
attached to the invoice required in (d)(1) of thi s
Rule so that three of the four copies of the
invoic e hav e a copy of th e court ord e r attach e d .
(e) The rate per hour for each forensic evaluator required
on the invoice under (d)(1)(D) of this Rule shall be the usual
and customary charges of the area program before adjust-
ment to the sliding fee scale. The amoimt invoiced to the
division shall not exceed the rate approved by the Division.
(0 The regional office shall review the invoices and court
orders to determine that all requirerrtonts in (d) of this Rule
have boon mot. — If th e invoic e s are in order and the regional
offic e has uncommitt e d for e nsic sorooning or e valuation
funds, the invoices shall bo init i al e d for approval by the
Regional Director or his dos i gnoo and for i^ arded to the
fiscal s e r . 'ic e o s e ction of th e Divioion for paymont.
(f) {%) The procedures of this Rule apply only to reim-
bursement for screening examinations or evaluations to
determine the capacity of an individual to proceed to trial
1461
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
and do not apply to reimbursement for any treatment
determined to be necessary as a result of the evaluation.
Statutory Authority G.S. 122C-147.1; 143B-10.
.1136 FUNDS FOR ASSAULTIVE CHILDREN
(a) In furtherance of the Appropriation Bill of the 1981
Session Laws, Chapter 859 and Chapter 1032, the Division
shall administer a program of grants for tho ostabliahmont
and opomtion of local programs funds to provide treatment
to children under the age of 18 who suffer from emotional,
mental, or neurological handicaps accompanied by violent
or assaultive behavior and who have been certified as Willie
M. class members in the case of Willie M., et. al. vs. Hunt
et. al. The focus of these programs may include, but are
not limited to, residential treatment programs and independ-
ent living arrangements.
(b) Programs operated by an area program or a private
program contracted by the area program may spend funds
for assaultive children for the following:
(1) staffing;
(2) travel;
(3) supplies;
(4) utilities;
(5) administrative and program equipment;
(6) administrative cost which can be clearly docu-
mented through direct assignment or a Division-
a pproved cost allocation method ;
(7) transportation of clients;
(8) other program noodo costs as approved by the
Division; and
(9) purchase, construction, alteration, improvement,
or repair of a facility owned by the area pro-
gram or county or non-profit contract agency
according to the following provioiono: provisions
of Rule .1123 of this Section.
(A) — A request for initial renovation of a nowly
acquir e d — facility — of fiv e — thouoond — dollara
($5,000) or l e oo ahall b e oubmitt e d to th e
appropriate regional office of tho Division for
approval. — Initial minor repairs to facilitios of
l e oo than one thouoond dollars ($1,000) shall
b e approv e d by th e ar e a program.
(B) — A request for alteration or improvomont of on
existing facility in excess of five thousand
dollara ($5,000) shall bo for * 'ardod to tho
Division Dir e ctor's offic e through th e appro
priato regional office of tho Division for ap
proval .
A r e qu e st for oonstruotion of a nov ^ ' faoilit)' or
(G)-
purchas e of an e xisting facility shall b e for
wardod — to tho Division Director's office
through tho appropriate regional office of the
Division for approval.
(B) — Each request as outlin e d in (b)(9)(B) and (C)
of this Rule shall be accompanied by a narra
tivo that explains tho nood for tho purchase.
construction, alteration, improvement or repair
of th e faoilit)' and a copy of the eoh e matio
drawings and sp e cifications. — If approv e d by
tho Division of Mental Health, Mental Retxir
dation and Substance Abuse Ser^'icee those
drawings and spooifioations shall be forv t 'ard e d
to tho Division of Facility SeP i 'iooo for r e view
and approval.
(E) — Upon approval by the Division of Faoilit)'
S e rvic e s th e ar e a program may prooood with
th e completion of th e proj e ct and shall moot
the-
of G.S. H3 129 and G.S.
provisions
1 4 3 131.
(F) — For oonstruotion, alt e ration or repair projeoto
th e Division of Faoilit>' S e rs'io e o shall oonduot
on aito inspections when the project is 33
porcont complete and 67 percent oomploto and
a final insp e ction when th e proj e ct is 100
p e rc e nt complete. — Funds up to 15 poroont of
tho coat shall bo advanced to an area program
upon a written assurance from tho area direc
tor that th e requirem e nts of G.S. 1'13 129 and
G.S. 113 131 have b ee n m e t. — An additional
30 porcont shall bo advanced after tho first
inspection and the remaining 25 porcont shall
b e paid after final insp e ction.
{fS>) — Prior to tho purchas e of on e xisting facility th e
area program shall submit two proport)' ap
praisala to the appropriate regional office for
r e vi e w and approval. Th e Division of Facility
S e rs'lo e s shall conduct an on oito inspection of
tho facility. — Following tho inspection and
approval of the purchase by tho Division of
Mental Health, M e ntal Retardation and Sub
stanc e Abus e S e rvic e s, Division funds shall b e
transferred to the area program.
(H) — When tho expenditure of division funds for
oonstruotion, alteration, r e pair or purchas e of
a facilit>' is fifty thousand dollars ($50,000) or
more the area board shall obtain written assur
once from tho o' ^ nor of tho facility that tho
facility shall — r e main availabl e — for M e ntal
H e alth, — M e ntal — R e tardation — and Substxmco
Abuse Sor^'icos.
(^ If a facility owned by an area program or its
private non profit oontraot agency was pur
ohos e d, — alt e r e d, — improv e d, or rohabilitnt e d
uaing funds for assaultive children and later
ceases to the used by the area program or its
private non profit oontraot ag e ncy for oeP i 'icoB
for m e mb e rs of tho Willie M. olaoo, th e faoil
ity shall be sold at tho current fair market
value OS dotorminod by tv ^ 'o indofwndont ap
praisala aoo e ptablo to th e Division and the
Division shall be reimburs e d a pro rata share
of tho proceeds of the sale based on tho
porcont of contribution made by the Division
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NORTH CAROLINA REGISTER
November 1, 1995
1462
PROPOSED RULES
in tho purohoflo, alteration, improvomont or
rohabilitation of th e faoilit)'. — If an ar e a pro -
gram or ito private non profit oontraot ag e ncy
wishes to retain a faoilit)' that was purchosod,
ahcrod, improved, or rohabilitatod using fundo
for aooaultivo ohiidron. th e area program or its
private non profit oontraot ag e noy shall pay to
tho Divioion a pro mta ohoro of tho current fair
market value of tho facility aa determined by
two ind e p e ndent appraioalo aoo « ptabl e to th e
Di' . 'ioion based on the oontribution mad e by th e
Division in tho purchaao, alteration, improve
mont, or rehabilitation of tho facility. — The
oontributiono mad e by all partioo ohall b e
maintained individually on a perpetual basio in
the lodger or group of accounts in which tho
details relating to the general fixed assets of
the ar e a program or ito privat e non profit
oontraot agenoy are maintain e d.
(c) Funds provided by the Division to support the services
provided to a Willie M. program shall be discontinued if the
program fails to serve any Willie M. clients for a period of
45 consecutive days unless an extension of time is approved
in writing by the Division Director.
(d) Funds for assaultive children shall not be used in
specific programs to serve children who are not Willie M.
class members if any class member who is in that zone and
who is appropriate for the specific program being funded
remains unserved. The zones within the state shall be
determined by the Division. Funds shall not be expended
for any program that does not serve Willie M. class mem-
bers. Funds shall not be used to start or operate a service
in its entirety which serves a disproportionately small
number of Willie M. clients. The Division shall negotiate
the minimum number of Willie M. children who shall be
served in each program and shall specify that number in the
grant award notice.
(e) Funds for assaultive children may be used to support
the cost of treatment for members of the Willie M. class
who attain the age of eighteen if the member continues to be
in need of such treatment and will benefit from continued
placement or involvement in the program. However, such
support shall not be in excess of six months following the
class member's 18th birthday or the end of the fiscal year
in which the class member reaches 18 years of age, which-
ever comes later.
(0 To apply for fund o administ e r e d under thi o Rul e , an
annual plan and budget for such funds shall be included in
tho appropriate area program's total annual plan and budget
packag e wh e n it is oubmittod to tho appropriat e r e gional
offic e of th e Division. The annual budget for programs
serving Willie M. clients shall be submitted in accordance
with the Willie M. Unit Cost Reimbursement Plan for the
fiscal year.
(g) The annual budget for programs serving Willie M.
clients shall be budgeted into separate cost centers. Such
cost centers shall include all sources of revenue which
support the direct cost of services for Willie M. clients.
Funds exjjended for services to Willie M. clients such as
outpatient visits, emergency services, or case management
services may be budgeted within the area program cost
center which provides that service if the area program
maintains sufficient statistical data to indicate the service
provided to the Willie M. client and the cost of the service.
(h) The area program shall provide financial and statisti-
cal refxjrts regarding funds for assaultive children to the
Division according to instructions of the Division.
(i) The limitation on the number of inpatient days as
contained in 10 NCAC 14D .0006(a)(1)(C); USE OF
DIVISION FUNDS FOR INPATIENT SERVICES; shall
not apply to Funds for Assaultive Children.
Statutory Authority G.S. 122C-147; 122C-150.
. 1 137 FUNDING DRUG EDUCATION SCHOOLS
(a) Pursuant to G.S. 90-96.01 the Department of Human
Resources shall have the authority to approve programs,
budgets and contracts with public and private governmental
and nongovernmental bodies for drug education schools
operated by an area program or Ofjerated by a contractor
through a contract with an area program.
(b) Fees paid by persons enrolling in a drug education
school established pursuant to G.S. 90-96.01 shall be used
to support the schools except as indicated in Paragraph (e)
of this Rule. Other funds to support the schools may come
from multiple sources such as, but not limited to, county
general funds, state appropriations, federal appropriations,
and receipts for services (patient fees). This Rule is
established to set accounting requirements for the fees
received pursuant to G.S. 90-96.01.
(c) Fees received pursuant to G.S. 90-96.01 shall be
limited to purchases of the following:
(1) to rent or lease space to conduct drug education
school classes if sufficient space is not available
in area program facilities;
(2) personnel and support costs necessary to assure
a systematic and timely processing of referrals to
drug education schools;
(3) supplies and materials necessary for the efficient
and timely operation, evaluation and administra-
tion of drug education schools and for develop-
ing and maintaining an efficient liaison process
with the judicial system, interested community
groups, and the Department of Human Re-
sources;
(4) non-administrative equipment necessary for the
operation of drug education schools;
(5) administrative equipment for drug education
school personnel employed full-time and a
pro-rated amount for persormel assigned less
than 100 percent of the time to drug education
schools;
(6) renovations that do not result in the acquisition
of real property by the area program;
1463
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
(7) travel required for the effective operation of the
drug education schools;
(8) area program administrative costs that can be
documented as chargeable to the schools; and
(9) other necessary operating expenses as approved
by the Division.
(d) Fees received pursuant to G.S. 90-96.01 shall not be
used for acquisition of real property by the area program.
(e) Fees received pursuant to G.S. 90-96.01 shall be used
to support the operation, evaluation and administration of
the drug education schools to the extent that the schools are
fully accredited by the Division. Any excess fees received
pursuant to G.S. 90-96.01 are to be used to continue or to
expand alcohol and drug services.
(f) Fees received pursuant to G.S. 90-96.01 shall not be
used in any manner to match state or division funds or to be
included in any computation for state or division formula
funded allocations.
(g) Fees received pursuant to G.S. 90-96.01 shall be
consistently identified as such. All such fees remaining at
the end of the area program's fiscal year shall retain their
identity and the fund balance of the area program shall be
so restricted as to assure continued use of the fees for the
drug education schools or to continue or to expand other
alcohol and drug abuse services.
(h) Area programs shall maintain records which indicate
which individuals have paid for the drug education schools.
(i) F*ursuant to G.S. 90-96.01, area programs shall
receive fees from either the person enrolled in the class or
from the judiciary. The individual enrolled in the school
shall pay the fee to the area program providing the school,
except that if the clerk of court in the county in which the
person is sentenced agrees to collect the fees, the clerk shall
collect all fees for persons sentenced in that county. The
clerk shall pay the fees collected to the area program
serving the catchment area in which the clerk is located
regardless of where the person attends the school.
(j) Area programs receiving fees from the judiciary for
individuals who will be enrolled in schools operated by
other area programs shall transfer 80 percent of the fees
received from the judiciary for those individuals to the area
programs enrolling the individuals u[>on receipt of an
invoice. The 80 percent shall be transferred to the area
program providing the school regardless of whether the
individual attends the school.
(k) Area programs receiving fees directly from an
individual who has been sentenced in a county outside the
area program's catchment area shall transfer 15 percent of
the fees collected to the area program which serves the
county where the individual was sentenced upon receipt of
an invoice from the area program serving the county where
the sentencing occurred. Any area program not desiring to
collect the 15 percent from another area program is not
required to invoice that program. A decision not to collect
the 15 percent shall be approved by the area board and
documented in the board minutes. An area program that
does not desire to invoice another area program shall honor
invoices presented to it from other area programs that desire
to collect the 15 percent.
(1) Five percent of all fees received by the area program
pursuant to G.S. 90-96.01 shall be forwarded to the Deport
mont of Human Rooourooa Division of MH/DD/SAS on a
monthly basis. The check for 5 percent of the fees received
shall be accompanied by a transmittal indicating from whom
the fees were received. The area program that initially
receives the fees from the persons paying the fees or from
the judiciaiy system shall be responsible for transferring the
5 percent to the D e partm e nt Division . Checks shall be
made payable to and sent to: Division of Mental Health,
Developmental Disabilities Montal Retardation and Sub-
stance Abuse Services, Fiscal Services Section. ControU e r'a
Offio e , Suite 4403 612, 325 North Salisbury Street, Raleigh,
North Carolina 27603 - 5906 J7^44.
(m) The amount of fees transferred to another area
program or to the division as indicated in (j) through (1) of
this Rule shall be recorded in the accounting records to an
account number designated by the Diviaion in its uniform
chart of accounts as transfer of DES Fees . Under no
circumstances shall the transfer of fees be recorded as an
operating expense in which the Division would participate.
(n) In order to secure approval of the program and budget
supported by fees received pursuant to G.S. 90-96.01, the
area program shall include the programmatic and budgetary
data in the annual plan of work submitted to the Division
each fiscal year.
Statutory Authority G.S. 90-96.01; 122C-132; 122C-143.
.1138 COMMUNITY SUPPORT SERVICES FOR
CHRONICALLY MENTALLY ILL
(a) — Th e Divioion shall maintain a program of grants to
area programs for the purpooo of providing oonmiunit)'
based support sop i 'icos for chronically mentally ill adults and
elderly individuals ser i 'od by area programs and their
contract ag e noi e o. — The grants are:
f4^ funds for oommunit)' oupport day/night programs
for the chronically mentally ill, and
(3) funds for community based support sen i 'ices for
th e ohronioally m e ntally ill.
(b) — This Paragraph appli e s to th e funds reforonood in
(a)(1) of this Rule. — Not le s s than three hundred sov
onty four thousand dollars ($37 4 ,000) annually plus applica
bl e inflation and oalar)' inoreaso funds appropriat e d by th e
L e gislatur e shall b e spent to op e rat e community support
day/night programs in area programs which had a program
operating prior to fiscal year 19 8 1 8 2 (Mountoinhouao —
Blu e Ridg e Ar e a Program; Sunshine House — N e w Riv e r
Ar e a Program; Pi e dmont Pioneer House — Gaoton/Linooln
Area Progmm) in an amount not to exceed twenty thousand
dollars ($20,000) plu s applicable — inflation and — s alary
inor e oo e funds p e r program p e r y e ar. — Funds may also b e
administ e r e d to n e w programs, but oupport for oaoh now
program shall not exceed fifty thousand dollars ($50,000)
per year plus applicable inflation and salary' increase funds.
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1464
PROPOSED RULES
If tho programa funded with those granto ore day/night
programo thoy ohall m ee t tho otandnrdo for Communit>'
Support Programo for Adultc and Elderly Individualo Who
j\ro Chronically Mentally III aa codified in 10 NCAC 1 8 P
Section .0500. Those funda may not bo usod for support of
inpati e nt eop - 'io e o. — Programo op e rated by an ar e a program
or oontraot programo of tho ar e a program or e e ligibl e for
funding of tho following oxpendituroo!
f4^ staffing:
(S) trav e l;
(3^ Qupplioo;
{4) administrative and program equipment;
{Sr^ repairs — and — maintenance — of facilities — which
roprooont normal upk e ep and do not mat e rially
inoroaoo the valu e of th e facility or e xt e nd ito
useful life (these funds shall not bo used for
purchase of real property); and
(4) other program n ee ds ao approv e d by the Divi
{e) — Funds for community based support sor i 'icoe for tho
chronically mentally ill not referenced in (h) of this Rule
may b e us e d to provid e an array of oor i 'io e e for tho ohroni
oally m e ntally ill including, but not Umit e d to, oooe manag e
ment, emergency sorvicoa, — inpatient sor^'iooo, rooidontial
services and community support day/night programs as
dooorib e d in (b) of this Rul e . — Programs roooiving fundo for
oommunity baood support Dor < 'io e o shall moot the applicabl e
standarda for the particular sorvico aa codified in 10 NCAC
1 8 1 through 1 8 Q. These funda shall be administorcd to aroa
programs on a p e r capita basis utilizing th e moot curr e nt
population data available from Offic e of Stat e Budget and
Managomont. — Those funds shall bo oxpondod aa follows:
f4-) Programs — operated — by — an — oree — program — er
oontraot — programs of th e ar e a — program ar e
e ligibl e for funding of th e following e xp e nd!
turoB!
fA) — staffing:
fR) — trav e l;
(€) suppli e s;
(©) — administrative and program equipment;
fE^ — other program needs as approved by tho Divi
sion; and
(F) — r e pairs and maint e nanc e of faoiliti e e, oth e r
than residential facilities which are governed
by (cX2) of this Rule, which represent normal
upke e p and do not mat e rially inoroaoo tho
valu e of th e facility or e xt e nd ito us e ful lif e .
Except for residential facilitioo ao provided for
in (c) (2) of this Rule, these funds shall not bo
us e d for purchas e of r e al property.
(3) Fundo for oommunity based support oervioeo for
the chronically mentally ill may bo used for the
purchase, construction, alteration, improvement
or r e pair of a r e cidontial facility by th e ar e a
program or a non profit board with division
approval. — Tlie program shall moot the require
monto of the following:
{A) — Tho Roflidential Facility Mortgage Payment
Progmm. Th e Division may partioipato in tho
mortgage paym e nt program in part or in total
dopopdont upon tho availability of state fund s .
(B) — Th e Residential Facility Purohaflo/Construotion
Program.
(+) Th e Division may participat e in tho down
payment or lump sum purchase or con
s truction of a residential facility in whole
or part contingent upon th e availability of
stat e fundo.
(») The aroa program or non profit board shall
secure two property appraisals for review
and approval by th e Division prior to
purchas e .
(iii) — If a new construction grant is roquootod,
tho area program shall submit two con
s truction bid oontraoto from two building
oontractoro — to the appropriat e regional
office for review and approval prior to
construction bid lotting.
(G) — A roquoot for initial renovation of a newly
acquir e d residential facility of fiv e thousand
dollars ($5000) or lees shall bo submitted to
the appropriate regional office of the Division
for approval. — Initial minor r e pairs to rooidon
tial faoiliti e o of looo than on e thouoond dollars
($1000) shall bo approved by tho area pro
gram.
(B) — A roquoot for alt e ration or improv e m e nt of an
e xioting rooidontial facility in e xoooo of five
thousand dollars ($5000) shall bo forwarded to
tho Division Director's offioo through tho
appropriate regional offic e of the Divioion for
approval.
(E) A roquoot for alteration or improvement of an
existing — facility — of five — thousand — dollars
($5,000) or l e ofi ohall be submitt e d to th e
appropriat e r e gional offic e for approval.
fF) — Each request as outlined in (c) (2) (B) and (D)
of this Rule shall bo accompanied by a narra
tiv e that explains tho nood for th e purchas e ,
construction, alt e ration, improv e m e nt or r e pair
of tho facility and a copy of tho schematic
drawings and sfHJcificat i ons. — If approved by
th e Division of Mental H e alth, M e ntal R e tar
dation and Substanc e Abus e Sen . 'io6fl, th e s e
drawings and spocifioations shall bo for * 'ardod
to the Division of Facility Services for review
and approval.
(G) — If th e rooidontial facility is op e rat e d by a
non profit board, tho area program shall si^
Q legally binding contract with tho private
non profit ag e ncy — for e ith e r — the — mortgag e
payments to bo mad e or th e purchas e or con
struction program as indicated in (c) (2) (A)
and (B) of this Rule. — A copy of tho appropri
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NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
)
ato contract shall bo obtained from tho Fiscal
Sorv'iooo Branch of the oontrul offic e of th e
Divioion.
(H) — If a rooidontial facility owned by an area
program or ita private non profit contract
agency woo purohatiod, alt e r e d, improv e d, or
rehabilitat e d uoing division fundo and lat e r
coofloo to bo used in tho delivery of services to
clionts by the area program or its private
non profit contract ag e ncy, th e facility shall b e
sold at tho curr e nt fair mark e t value as d e t e r
ffli flod by tv ^ 'o indopondont appraisals accept
able to tho Division. — The Division shall bo
roimburoed a pro rata share of the proooodo of
tho sale baoed on the p e rc e nt of contribution
mado by the Division in tho purchase, alter
ation, improvement or rehabilitation. If an area
program or its non profit contract program
wiohoo to r e tain a facility that woo purchas e d,
altered, improved or rehabilitated using funds
for Communit)' Support Sor>'ico 9 for Chroni
oally Mentally III, the area program or its
contract program shall pay to tho Divioion a
pro rata aharo of tho current fair mnrkot value
of tho facUit)' OS dotorminod by two indopond
ont appmioalo acc e ptabl e to the Divioion baoed
on contribution mad e by th e Division in th e
purchase, alteration, improvement or rehabili
tation of the facility. — This provision may bo
waivod by tho Divioion Dir e ctor upon written
roquoot of th e program. — Th e ar e a program
shall maintain records on a continuous basis
which rofloct tho amount of contribution for
purchaoo, alteration, improv e ment, or rehabili
tation by th e Division, ar e a program or oth e r
funding ontit>'.
(d) Fund Balance. — An allowance for a fund balance for
area programo or contract programs for both t)'p e s of
community support funds io mad e in Rul e .1125 of thio
Section.
(o) Application for on allocation of both t^'poa of commu
nit>' support fundo shall b e as follows:
^V) To apply for funds an annual plan and budg e t
for such fiindfl shall bo included in the appropri
ato area program's total annual plan and budget
package v ^ 'hon it io oubmitt e d to th e appropriat e
r e gional offic e of the Divioion.
(3) Funds shall be allocated by tho Director of tho
Division among tho regional offices.
(3) Bas e d on th e annual plan and budg e t oubmitt e d
and availability of fundo, allocation of funds for
area programs within each region shall bo made
by the Division Director or hi s dosignoo.
Statutory Authority G.S. 122C-1 12(a)(6); S.L. 1981 C.
1007; 122C-143; 122C-147; 122C-150.
.1139 FUNDS FOR TREATMENT
ALTERNATIVES TO STREET
CRIME
(a) In furtheroDoo of on appropriation reoeivod from the
North Carolina Legislature, tho Division shall administer a
program of grants to Guilford Ar e a Program and Wake
Aroa Program to reduc e drug related crim e and criminal -
recidivism among substance abusing offenders by providing
a mechanism for referral — of appropriate offender s to
community bas e d tr e atment programo. — The grants shall b e
call e d Funds for Tr e atm e nt Alt e mativ e o to Str ee t Crime.
(b) Funda for Treatment Alternatives to Street Crime shall
bo administered to area programo on a match basis. — The
match ratio ohall bo no loss than 20 p e rc e nt local funds and
no mor e than 8 p e rc e nt Fundo for Tr e atm e nt Alt e mativ e o
to Street Crime.
(e) — Programs operated by an area program or a private
program contract e d by th e area program may e xp e nd Funds
for Treatment Alt e mativ e o to Str ee t Crim e for th e follow
{i^ Staffing;
(^
trav e l;
(3) ouppli e o;
(4) utilitios;
(5) administrative and program equipment;
(6) repairo — and — moint e no Hee — of faciliti e a — which
r e pr e s e nt normal upkeop and do not mat e rially
increase tho value of the facility' or extend ita
useful life; and
f?^ oth e r program needs ao approv e d by th e Divi
(d) Funda for Treatment Alternatives to Stroot Crime shall
not bo used for tho purchase of roal property.
(e) — To apply for fundo adminiotorod under thio Rul e , an
annual plan and budg e t for ouch fundo shall bo included in
tho appropriate area program's total annual plan and budget
package when it is submitted to tho appropriate regional
offic e of th e Division.
Statutory Authority G.S. 122C-132; 122C-143; 122C-147.
.1140 COMMUNITY MENTAL
HEALTH SERVICES BLOCK GRANT
(a) The Division shall administer a grant program for the
federal Alcohol/Drug and Community Mental Health
Services Block Grant which is made available to the
Division under the authority of Public Law 97 35 102-321 .
(b) The appropriate pwrtion of funds in tho block grant
which are made available to the Division for alcohol, drug
a«d Community mental health services shall be us e d to
mak e grants to e ligible programo for tho provioion of
comprehensive sors'lcoo. — In aooordanoo with federal law,
area programs recoivmg grants under tho Community'
M e ntal H e alth Centers Act as of Octob e r 1, 19 8 1 shall
continue to bo funded until ouch tim e ao th e grant would
havo expired if tho Community Mental Health Centers Act
had boon continued. Tho annual allocation for tho oontinu
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1466
PROPOSED RULES
ing montal health grantees shall be at a lovol proportionato
to tho roduotion in tho fodoral appropriation, made available
to eligible programs. The purpose of these funds is to
provide comprehensive community mental health services to
adults with a serious mental illness and to children with a
serious emotional disturbance who meet the UCR criteria
for Level 1 or Level 2^
fe^ — RequircMi Sorv'iooo. — To bo oligiblo to roooivo block
Grant funds, an area program shall provide tho following
6or » 'io e 6:
f4^ outpatient oop - 'io e o, including opooioliaod outpa
ticnt sorv'icoa for children, tho elderly, individu
als who are chronically nwntally ill, and reoi
donto of ito oop . 'ioo aroa who have boon dio
charged from inpati e nt treatm e nt at a m e ntal
health facility;
(3^ 2 4 hour a day omergoncy care sor i 'icoB;
{^) day treatment or othor partial hospitalization
sorvioeo;
{A) s creening — for patients being considered — fef
admission to state mental health facilities to
determine the appropriaton e se of ouch admiooion;
(#) consultation and education ser i 'ioos.
(c) The mental health services shall be provided within
the limits of the capacity of the area program, to any
individual residing or employed in the service area of the
center, regardless of ability to eSY for such services, in a
manner which preserves human dignity and assures continu-
ity and high quality care.
{4^ — R e quir e d Exp e nditur e s — Alcohol and Drug. — On a
statewide basis, block grant funds for alcohol and drug
soP i 'lcos shall bo expondod in accordance with tho following:
ft9 At leoflt 35 p e rc e nt of th e funds for alcohol and
drug Borviooo shall bo expended for programs
and activities related to alcoholism and alcohol
abuse.
(2) At l e ast 35 percent of th e funds for alcohol and
drug GOP i 'io e s shall b e e xp e nd e d for programs
and activities relating to drug abuso.
(53 At least 20 pwrcent of tho amount used for
alcohol and drug abus e s e rvic e s shall b e e x
p e nd e d for prevention and e arly int e r . ' e ntion
programs designed to discourage the abuse of
alcohol or drugs, or both.
The Division shall revi e w propos e d e xp e nditur e s of all ar e a
programs and if the perc e ntag e r e quir e m e nts for s e rvic e s
and prevention spocifiod in (d)(1), (2). and (3) of this Rule
are not met. the Division shall require changes in area
program — e xpenditur e — patt e rns — te — moot — those — f e d e rally
mandat e d r e quir e m e nts.
(d) Funds shall not be expended for any of the following
uses:
(1) to provide inpatient services.
(2) to make cash payments to clients.
(3) to purchase or improve land, purchase, construct
or permanently improve any building or other
facility, or purchase major medical equipment.
(4) to satisfy any requirement for the expenditure of
non-Federal funds as a condition for the receipt
of Federal funds.
(5) to provide assistance to any entity other than a
public or nonprofit private entity .or
(6) to support any individual salary in excess of one
hundred twenty five thousand dollars
($125.000).
(e) The Division Director shall allocate annually funds to
the area programs. Non Eligible Exp e nditures. — Blook grant
funds shall not be used for tho purchase of rool property or
to fund mental retardation or inpatient aon i 'icoo. — Inpatient
sorvioeo ore defined — oo thooo oor^'iooo — provid e d to tho
e motionally disabl e d, alcoholic, or drug abus e r which or e of
a medical nature and are rendered in a hospital sotting to
which the consumer of the 8or . 'icefl has boon admitted as a
patient.
(0 Matching. — i\rea programs shall b e r e quired to match
block grants at the same ratio aa they were required to
match federal funds during tho 19 8 8 1 fiscal year which
ar e now includ e d in th e block grant.
(g^ — Allocation Among Regional Offic e s. — Th e Division
Director shall allocate annually block gmnt funds among tho
regional offices of tho Division. — At tho diocrotion of tho
Division Dir e ctor, th e Regional Dirootor shall allooato tho
blook grant funds among tho eligibl e ar e a programs of th e
region.
(f) (b) Block grant funds allocated shall be used to
supplement and increase the level of state, local, and other
non-federal fiinds and shall, in no event, supplant such state,
local, and other non-federal funds. The Division shall
monitor compliance by comparing total budgeted revenues
for the current fiscal year with those budgeted for the prior
fiscal year for each area program exclusive of block grant
fiinds. If block grant funds are reduced, the area program
may reduce its participation in a proportionate manner.
(i) To apply for blook grant funds, an area program shall
includ e an annual plan and budget for such funds in ito total
annual plan and budget package when it is s ubmitted to tho
appropriate regional office of tho Division.
Statutory Authority G.S. 12C-141; 122C-143.1; 122C-143.2;
122C-144.1; 122C-I47; 122C-147.1; 122C-147.2; P.L. 102-
321.
.1141 CONTINUITY OF CARE
Tho area program and division shall follow tho provisions
of 10 NCAC 18V .0001 through .000 8 ; CONTINUITY OF
Ci\R£: (division publication APSR 120 2) in planning and
budg e ting for continuity of care for p e rsons coming under
tho provisions of General Statute 122C 63.
Statutory Authority G.S. 122C-132; 122C-147.
. 1 142 ALLOCATION OF OUTPATIENT
COMMITMENT FUNDS
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NORTH CAROLINA REGISTER
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10:15
PROPOSED RULES
(a) Outpationt involuntary' oommitmont oonsiato of mental
hoalth troatmont, looo int e noivo than poyohiatrio hoopitaliza -
tion, — that io ordorod by the oourt purouant to G.S.
122C 271. — Outpationt troatmont may includo modioation;
individual or group thompy; day or partial day programm ifig
aotivitioo; oorviooo and training including e duoational and
vocational aotivitioo; oupop i 'ioion of living arrangom e nto; and
any othor oorvicoo proscribed to alloviato the person's illnoao
or diaabilit)', to maintain somi indopwndont functionia gT-ef
to proi i 'ont further dotorioration that may rooult in the
nooosoit)' for oommitmont to an inpatient pa>'ohiatrio faoilit>'.
(b) The Divioion shall allocate funds to each region on a
per capita baoio.
(o) The appropriat e r e gional offic e of th e divioion ohall
allocate fimdo to area programa baood on an actual commit -
mont basis, not to oxoood the amount ao approved by the
Lxigislaturo por year per case. — Aroa programa shall com
ploto th e "Outpationt Involuntar>' Commitment Roimburo e
ment" form each month to r e c e iv e roimburoem e nt. — R e im -
bursement shall bo made as follows:
(^ Area programs shall bo allocated 1/12 of the
annual appropriated amount approv e d by th e
Legislature p e r y e ar por oao e for each client
under outpationt involuntary' commitmont r-
(3) Area programa shall receive a full month's
allocation — for outpationt — involuntar)' oliento
whose date of oommitmont io from th e lot
through the 15th of any month. — j\rea programs
shall receive one half the monthly allocation for
outpationt involuntary oliento whoo e dat e of
commitm e nt oocuro after th e 15th of the month.
If a client's involuntary commitment terminates
from the 1st tlirough the 15tb of any month, the
area program ohall receive a half month's allooa
tion. If a oU e nt'o outpati e nt involuntar)' commit
ment terminates after the 15th of the month, the
area progmm shall receive a full month's alloca
(3^ Monthly paym e nts to the area program ohall
continue for the length of the client's outpatient
commitment or until the annual appropriation for
th e program io fully d e pl e t e d.
(4^ Ar e a programs ohall forward a copy of the
commitmont ordor form AOC SP 203 to the
regional office to coincide v ^ 'ith the time frame
of the roimburoement request. — Roimburoement
will not b e proo e oBed until th e AOC SP 203
form io received by the regional office.
(5) Reimbursement requests shall bo submitted to
the regional offioo for payment within 9 dayo
aft e r th e month in which o e p . 'io e io r e nd e r e d.
Reimbursement roquosts submitted after 90 days
may bo paid based upon availabiht>' of funds and
divioion approval.
(4) — Outpatient commitment funds shall b e allocat e d to
area programs in addition to othor funds they rocoivo.
(e) The Division shall conduct cost studios at fiscal year
end to determine if the funda ollooatod to area progfams
oxoood th e actual coot of sorvioe.
Statutory Authority G.S. 122C-1 12(a)(6); 122C-147;
122C-271; S.L. 1983, c. 864.
.1143 SOUTH CENTRAL
DEEVSTITUTIONALIZATION
PROGRAM FUNDS
(a) Th e Divioion ohall administer a program of gronto to
b e known ao oouth c e ntral d e institutionalization program
funds.
(fe) — South central deinstitutionalization program funda
shall b e mad e availabl e to th e oouth c e ntral r e gion by th e
Divioion to mov e th e focuo of oor^'icoo from largo oontral
ized institutions — te — small — appropriate — community baaed
programa and 9or . 'icos. The goal of these program funds i s
to o e p i ' e , in a oommunit)' boo e d oetting, acut e ly and ohroni
oally m e ntally ill p e roona curr e ntly in the oommunity ao well
aa thoso sorvod at Dorothea Dix Hoapitxil.
(c) South control deinstitutionaUzation program fiinda aholl
b e admlniot e r e d to ar e a programo uo direct gronto not
r e quiring local matoh.
(d) South oontral doinatitutionolization program funds may
bo used for repairs and maintononco of faoilitioo which
r e pr e o e nt Dormal upk ee p and do not mat e rially inor e oa e th e
valu e of th e focilit)' or e xt e nd ito useful life.
(e) — Applicotion for south control deinstitutionalization
progmm fund s shall be made by submitting on onnual plan
and budg e t to th e oppropriot e regional office.
(f) Boo e d on th e approv e d annual plan and budget roquoot
submitted and availability of funds, allocation of south
control deinstitutionolLzotion progrom funds to area progroma
sholl b e mode by the oouth c e ntrol R e gionol Director \ ^ 'ith
th e ooDourr e no e of th e Division Dir e ctor.
Statutory Authority G.S. 122C-1 12(a)(6); S.L. 1983, 761,
Section 28.
.1144 REPLACEMENT OF LOST BLOCK GRANT
FUNDS FOR MENTAL HEALTH
(a) Th e Divioion ohall mak e ovoilabl e dir e ct gronto to ar e a
progromo for th e r e plac e m e nt of loot block grant funds for
mental hoalth under the authorization of G.S. 122C 150.
(b) Thoao funds sholl be mode available to area programa
to oupplomont o r e duction of blook grant fundo for m e ntal
h e alth.
{e) — Replacement of loot blook grant funds for mental
hoalth shall bo odminiaterod to oroa programa oa direct
grants not requiring local match.
(d) — R e ploc e ment of loot block gront fimdo for m e ntal
health may be uaod for ropoirs and maintenonce of focilitiea
which represent normal upkeep and do not materially
incr e as e th e volu e of th e fooilit)' or e xt e nd ito uooful life.
( e ) To opply for replaoomont of loot block grant fundo for
mental hoalth, on annual plan and budget for such funds
shall be includod in the appropriate oroa program' s total
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NORTH CAROLINA REGISTER
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1468
PROPOSED RULES
annual plan and budgot package whon it ia oubmittod to the
rogional office of tho Divioion.
(f) Baood on tho approvod annual plan and budg e t r e qu e ot
submitted and avoilabilit)' of funds, allocation or roplaoo
mont of loot block grant funds for montnl hoolth to aroa
programs shall bo mad e by th e appropriat e R e gional
Dirootor with tho oonourrono e of tho Divioion Dir e ctor.
Statutory Authority G.S. 122C-112; 122C-147; 122C-150.
. 1 145 DEVELOPMENTAL DAY CARE
GRANTS-IN-AID
(a) Tho Divioion shall adminiator a program of grants to
ftfea — programs — te — be — oall e d — dev e lopm e ntal — day — eafe-
grants in aid.
(b) Dovolopmontal day earo grants in aid shall bo admin
istorod to area programs up to a stimdard rato per month as
approv e d by th e Gen e ral Asoombly. Divioion Dir e otor or
both, unlooo adminiot e rod on a total cost baaio with th e
Division Diroctor's approval in accordonoo with Section 26
of tho "Area Program Budgeting and Procoduroa Manual"
(divioion publication iiVPSM 75 1) adopt e d pursuant to G.S.
150B H(o), ao publiohod June 27. \9 % ^. Copi e s of S e ction
26 of tho "Area Program Budgeting and Procoduroa Man
ual" may bo inspoctod at tho Raleigh offico of tho Divioion
or copi e s may b e obtain e d from tho Publications Offic e of
th o Division at a charg e which cov e rs printing and postag e .
fe^ — Children in whoso bohalf funds are administered to
programs shall bo:
(4^ montfllly rotnrdod, oth e rwis e d e v e lopmontfllly
disabl e d. — dovolopmentally — delay e d. — or hav e
atypical dovolopmont or bo infants or toddlers at
high risk for any of those conditions, for whom
a disability of> e oiFio diagnosis io inappropriat e ;
(5) between tho ages of birth and 19; and
(5) residents of North Carolina-
id) Children with mod e rat e , s e vere, or profound m e ntal
retardation, substantial other developm e ntal disabiliti e s, or
infants or toddlers with or at high risk for developmental
de l ays, developmental disabilities, or atypical development
shall be giv e n first priority for availabl e funds. Childr e n
determined to b e oubotontially d e v e lopm e ntally disabled shall
bo those functioning at either Lovol I or Level 11 as defined
in "Pioneer Funding System Operating Manual. Volume III:
L e v e l — of Eligibility. — S e ction — 4-; — Child — D e v e lopm e ntal
Disability". — Pr e school childr e n with mild m e ntal r e tarda
tion. other mild developmental disabilities, developmental
delay s or those with atypical dovolopmont shall bo given the
n e xt priority for availabl e funds if thoy meet th e e ligibility
r e quir e m e nt sp e cified in (c) (3) of this Rul e and if prior
approval of tho appropriate regional director or designee is
obtained.
fe^ — To apply for d e v e lopmental day car e grant in aid
funds an annual plan and budgot for ouch funds shall b e
included in tho appropriate area program's total annual plan
and budgot package whon it is submitted to the appropriate
rogional office of tho Division.
(f) — Funds for dev e lopm e ntal day oaro shall be allocat e d
among th e r e gionc of the Divioion by th e Divioion Dirootor.
(g) Dioburoomont of dovolopnaontal day oaro grant in aid
funds shall be made after approval of tho plan and budgot by
th e R e gional Dirootor.
Statutory Authority G. S.
122C-147.
122C-1 12(a)(6); 122C-131;
.1146 RESIDENTLVL FAdLITIES FOR
SEVERELY MENTALLY ILL ADULTS
(e^ Pursuant to G.S. 122C 150, tho Division shall
administ e r a program of grants to area programs to b e
oall e d ftinds for resid e ntial facilities for s e v e rely mentally ill
adults.
fb) — Such grants shall bo used to support residential
faciliti e s for s e ver e ly mentally ill adults.
(o) Funds for residential faciliti e s for s e verely m e ntally ill
adults shall bo administered to area programs as direct
grants and do not require local matching.
(d) — Programs op e rated by an ar e a program or oontraot
programo of th e ar e a program may op e nd funds for rooidon
tial faoilitios for severely mentally ill adults for the follow
tagt
(4) staffing;
(3) to rent or lease rooid e ntiol faoilitios;
(3) furniture or apooializod oquipmont for roaidonts;
f4) traDsp>ortation of rosidonts;
(5) other noooooary operating e xp e ns e s as approv e d
by the Division; and
(6) repair s and — maintenanco — of facilities which
roproQont normal upkeep and do not materially
increooe tho valuo of th e facility or ext e nd its
us e ful lif e .
(o) Funds for residential facilities for sovoroly mentally ill
adults may bo used for tho purchaoo, construction, alter
ation, improvem e nt or repair of a r e sid e ntial facility by th e
area program or a non profit board und e r contract with th e
aroa program with division approval. — Tho program shall
meet tho requirements of tho following:
fi^ In ord e r to participat e in a F e deral D e partm e nt
of Housing and Urban Developm e nt (HUD)
Section 202 proj e ct (12 U.S.C. § 1701g) for tho
purchase, construction or alteration, improve
ment or repair of a faoility^, th e program shall
moot tho following r e quir e m e nts:
(A) — Tho area program may request funds for this
project from tho division. — Tho Division may
participat e in HUD Sootion 202 proj e ct contin
g e nt upon th e availability of stat e funds.
(B) TTio area program shall sign a legally binding
contract with a private non profit agency to
6p) e o i f)' that if th e facility o e oD e o to b e us e d in
th e d e liv e ry of oor i 'iooo to th e clients, — the
private non profit agency shall reimburse tho
Division according to tho following require
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NORTH CAROLINA REGISTER
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10:15
PROPOSED RULES
monto !
(i) If th e faoilit>f is sold, it should b e oold at
tbo ourront fair morkot value ao dotorminod
by two indopondont upproiaala aocoptablo
to tho Division, and tho Division shall bo
roimburo e d a pro rata shor e of th e s e lling
prioo of tho faoilit)' bas e d on th e oontribu
tion mado by tho Division in tho purchase,
oonotruction or alteration, improvomont or
ropair of th e faoilit)'.
(ii^ If the faoilit)' is r e tain e d by tho privat e
non profit agoncy, tho Division shall bo
fe mbursod a pro rata sharo of tho current
fair mark e t valu e of th e facility as det e r
min e d — by — twe — indep e nd e nt — appraisals
accoptable to tho Division basod on the
contribution made by tho Division in the
purohaso, oonotruction or alt e ration, im
provomont or repair of th e faoilit)'.
(€^ — Tho aroa program shall maintain a record
which rofloots tbo amount of contribution mndo
by th e state for purchas e , — oonotruction or
alteration, improv e m e nt or r e pair to th e faoil
(3) Projocta that involve tho purchase, construction,
alteration, improv e mont or r e pair of a rooidontial
facility' with th e e xc e ption of f e d e ral Houoing
and Urban Dovolopmont (HUD) 202 projects
shall moot tho requirements of tho following:
(A) — Th e R e oidontial Faoilit>' Mortgag e Paym e nt
Program. Th e Division may participat e in th e
mortgage pwymont program in part or in total
dependent upon tho availability of state funds.
(8) — Th e R e sidential Faoilit)' Purchas e /Construction
Program,
(i) Tho Division may participate in tho down
payment or lump s um purchase or con
stniotion of a r e sid e ntial facility' in whole
or part conting e nt upon th e availability' of
state funds.
(«) Tho aroa program or non profit board shall
s e cur e tv ^ 'o prop e rty' appraioalo for r e vi e w
and approval by the Division prior to
purchase.
(tii) — If a now construction grant is roquootod,
th e ar e a program shall submit thr ee con
stniotion bid contracts from thr ee building
oontmotorB oxcopt as provided for by G.S.
1 4 3 132 to tho appropriate regional office
for r e vi e w and approval prior to construe
tion bid l e tting.
f€) — A request for initial renovation of a newly
acquired residential faoilit)' of five thousand
doUoro ($5000) or l e se shall bo submitt e d -te
th e appropriat e r e gional offic e of th e Division
for approval. Initial minor repairs to facilities
of lose than one thousand dollars ($1000) shall
bo approved by tho area program.
(B^ — A requ e st for alt e ration or improvem e nt of an
existing reoidontial fooilit)' in e xo e oo of fivo
thousand dollars ($5000) shall bo foi^'ardod to
tho Division Director's office through tho
appropriate regional offic e of tho Division for
approval.
A request for alteration or improvomont of an
m-
existing — facility' — of fivo — thousand — dollars
($5,000) or l e ss shall b e submitt e d to the
appropriate regional offic e for approval.
(F) Each request as outlined in (o)(2)(B) and (D)
of this Rule shall bo accompanied by a narra
tiv e that e xplains tho ne e d for th e purchas e ,
^G)-
oonotruction, alteration.
improv e m e nt or repair
of the facilit)' and a copy of tho schematic
drawings and specifications. — If approved by
tho Division of M e ntal H e alth, Montal R e tar
dation and Substanc e Abuse Sorviooo, thooo
drawings and spocifioations shall bo forwarded
to tho Division of Facility Sorviooe for review
and approval.
If th e resident i al
facilit)' io operat e d by a
non profit board, the area program shall si^
a legally binding contract with tho private
non profit agency — for e ither the mortgage
paym e nts to b e mad e or tho purohaso or con
s truction program as indicated in (o)(2)(A) and
(B) of this Rule. — A copy of tho appropriate
contract shall bo obtained from the Fiscal
S e r^'io e o Branch of the control offic e of the
Division.
(H) — If a rosidontial — facilit)' owned by an area
program or its privat e non profit contract
ag e ncy was purohoo e d, alt e r e d, improved, or
rehabilitated using division funds and late r
ceases to bo usod in tho deliver)' of sorvicos to
cli e nts by th e or e o program or its privat e
non profit contract agency, th e facility shall b e
sold at the current fair market value as deter
mined by tv r 'o indopondont appraisals accept
able to th e Division. — The Division sholl bo
r e imburs e d a pro rata shor e of th e proce e ds of
tho sale based on the porcont of contribution
mode by tho Division in tho purohaso, alter
ation, improv e m e nt or rehabilitation. — If an
ar e a program or its non profit contract pro
gram wishes to retain a faoilit)' that was pur
chasod, — altered, — improved or rehabilitated
using funds for residential faciliti e s for s e
v e r e ly m e ntally ill adults th e ar e a program or
its contract program shall pay to the Division
a pro rata share of tho current fair market
value of tho faoilit)' as d e t e rmin e d by two
ind e p e nd e nt appraisals oooeptabl e to th e Divi
sion basod on contribution made by the Divi
sion in tho purchase, alteration, improvement
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NORTH CAROLINA REGISTER
November 1, 1995
1470
PROPOSED RULES
or rohnbilitation of the faoilit)'. — Thia proviaion
may bo waivod by th e Divioion Direotor upon
written roquoot of th e program. — Th e ar e a
program shall maintain rooofdo on a oontinu
ous basis v i hich rofloct the amount of contribu
tion for purohaoo, alteration, improv e m e nt, or
rehabilitation by the Divioion, area program or
other funding entity.
^ Immediately upon rocoipt of said funds or aa
soon thereaft e r as praotioal, an ar e a program
or privat e non profit agonoy r e o e iving otat e
funds pursuant to this Rule shall cause to b e
recorded with the Register of Deeds of the
count)' — in whioh the r e sid e ntial — faoilit)' is
looatod a notioe of olaim in li e u (or oontinuing
lien as applicable) on behalf of the state for all
funds provided by the state through the Divi
(f) Fund balonoe. Th e Division may allow ar e a programfi
or contract programs to maintain a fund balance of no more
than 15 percent of the current annual budget in accordance
V i ith Rule .1125 of this S e ction.
fg3 — To apply for funds for r e sid e ntial — faoilitios for
severely mentally ill adults, an annual plan and budget for
such funds shall be included in the appropriate area pro
gram's total annual plan and budg e t packag e wh e n it is
submitt e d to th e appropriat e regional offic e of th e Division.
(h) Funds for residential facilities for aoveroly mentally ill
adults shall be allocated among the regions of the Division
by th e Division Dir e ctor.
(i) Booed on th e approved annual plan and budget request
submitted and availability' of funds, allocation of funds for
residential facilities for severely mentally ill adults to area
programo within e ach r e gion shall b e made by the Division
Director or his d e sign ee .
Statuwry Authority G.S. 122C-1 12(a)(6); 122C-141;
122C-147; 122C-150; 143B-10.
.1147 EARLY TNTERVENfTION-FEDERAL-
EHA
(a) Th e Division shall administ e r a program of grants to
area programs call e d Early Int e r i ' e ntion Federal Education
of the Handicapped Act (EHA).
(b) Such funds shall be used to provide for the establish
mont of earl)' inter - ontion & e r > ic <e 6. — Early inten'ention
s e r i 'ioes shall b e provid e d through homa or c e nt e r bas e d
models, program consultation or through other specific
activities specified in P.L. 99 4 57. Section 672(2) (A G).
which — is — adopt e d — by — r e f e r e nc e — according — te — G.S.
150B 1 1(0). within the following guid e lin e s:
f4-) Children served shall be those with developmen
tal delays or atypical development or those at
risk for thes e conditions ac d e fmed in 10 NCAC
(33 Children scr . 'ed shall bo from birth through two
years of ago.
(3) Funds shall bo uood to oupploroont and incroaQ &
th e l e v e l of State and loool fundo for thooo
children and in no ooc e oupplont ouoh Stat e and
local fundo.
(c) To apply for funds for those sor^'ioos, an axmual plan
and budget for such funds shall bo includ e d in the appropri
at e ar e a program's total annual plan and budget paokago
when it is submitted to the regional office of the Division.
(d) Funds shall be allocated to the regions of the Division
by the Divioion Dir e ctor.
(o) Based on the annual plan and budget requ e st cubmitted
by the area programs and approved by the Division, funds
will bo made available for reimbursement of oors'ieoe.
Authority G.S. 122C-1 12(a)(6); 122C-131; 122C-150; 20
U.S.C. 1471.
.1148 THOMAS S. COMMUNITY SERVICES
(a) Funds appropriated to the Division for members of the
Thomas S. Class as identified in the Thomas S., at al v.
Britt, formerly Thomas S., et al v. Flaherty lawsuit, shall
be exjjended only for programs serving Thomas S. Class
members or for services for those clients who are:
(1) adults with mental retardation, or who have been
treated as if they had mental retardation, who
were admitted to a state psychiatric hospital on
or after March 22, 1984, and who are included
on the Division of Mental Health, Developmen-
tal Disabilities and Substance Abuse Sei^'ices'
official list of prospective class members includ-
ing focus class members; or
(2) adults with mental retardation who:
(A) have a documented history of State psychiatric
hospital admission regardless of admission
date; or
(B) have never been admitted to a State psychiatric
hospital but who have a documented history of
behavior determined to be of danger to self or
others that results in referrals for inpatient
psychiatric treatment; and
(C) without funding support, have good probability
of being admitted to a State psychiatric hospi-
tal. Expenditures for services to clients listed
in Subparagraph (a)(2) of this Rule are limited
by legislation and require specific approval by
the Division.
(b) FVograms operated by an area program or a program
contracted by the area program or a provider under direct
contract with the Division to provide may spend funds for
Thomas S. Services funds for the following:
(1) facility rental;
(2) utilities;
(3) staffing;
(4) supplies;
(5) travel;
(6) rental and purchase of administrative and pro-
gram equipment according to the following
1471
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
provisions:
(A) equipment is defined as purchases costing five
hundred dollars ($500) or more and having a
useful life of at least one year;
(B) all equipment purchased with Thomas S.
Service funds will be inventoried and identified
as Thomas S. equipment and must be used for
Thomas S. services;
(C) equipment may be held in the name of a con-
tract provider with the stipulation that if the
equipment ceases to be used to provide ser-
vices to Thomas S. clients, ownership reverts
to the contracting area program who must then
contact the Division for disposition instruc-
tions;
(D) the Division must be notified whenever equip-
ment purchased with Thomas S. Service funds
ceases to be used to provide services to
Thomas S. Clients for 45 consecutive days;
and
(E) the disposition of equipment purchased with
Thomas S. funds requires Division approval;
(7) administrative cost which can be clearly docu-
mented as Thomas S. administrative costs
through direct assignment or Division approved
cost allocation methodology;
(8) transportation of clients;
(9) other program costs;
(10) in accordance with G.S. 122C-147, the pur-
chase, construction and alteration, improvement
or rehabilitation of a facility owned by the area
program or county for the provision of day /night
and/or 24 hour services by an area program or
non-profit contract agency; or mortgage pay-
ments for private non-profit agencies according
to the following provisions: provisions of Rule
■ 1123 of this Section; and
(A) — prior to th e purohoo e of on e xisting facility, the
ar e a program or oontraot ag e ncy through th e
ftfea — program, — sheH — submit — twe — proport>'
appraisals complotod by lioonsod real oatato
apprais e rs to tho Division for approval. — A^
prov e d funding will b e r e l e as e d by th e Divi
aion after approval of tho approiaale.
(B) — application — asd — approval — fef — construction
funding shall b e mad e in aooordono e with Rul e
■ 1133 of thio Section (i\rott Montal Health
Contor Construotion Project);
(C) a request for renovations, alteration, improve
mont or rehabilitation of a facility of fiv e
thousand dollars ($5,000) or mor e shall b e
fop ^ 'ardod to tho Division Director's Office for
approval. — Each request shall bo accompanied
by a narrativ e that e xplains th e need for and
d e eoription of th e alteration, improv e m e nt or
repair of tho facility'. — Les s er amounto do not
require Division approval; and
(B) — if a facility owned by an area program or its
non profit oontraot agonoy — was purohoood,
alt e r e d, — improv e d — ef — r e habilitat e d — using
Thomas S. Sorvioe funds of five thousand
dollars ($5,000) or more cooooo to bo used by
th e ar e a program or its oontraot provider for
se rvic e s to Tbomofl S. Cli e nts for ' 15 oonooou
tive days, tho Division shall bo contacted
immodiatoly for disposition instructio as: — If tho
Division so dir e oto, tho facility shall b e sold at
the ourrent fair market value in aooordonoe
with General Statue 153 A 176 and General
Statute 160A 266. After tho sole, tho Division
shall bo roimburood th e Division's pro rata
share of tho proooods from th e sale based on
tho percent of contribution made by tho Divi
si on for tho purchase, alteration, improvement
or r e habilitation of th e sold facility. If on area
program or its oontraot provider wishoa to
maintain — ownership of a faoilit)' — that wua
purchased, altered, improved, or rehabilitated
using Thomas S. — S e rvic e — fundo, th e area
program or non profit oontraot provider may)
if authorized by tho Division, pay to tho Divi
sion tho Division's pro rata share of the cur
rent fair mark e t value of the facility aa d e t e r
ffiifle d by ts » 'o certifi e d apprais e rs or tv t 'o
independent appraisals — obtained — through a
licensed real estate agency. — The contribution
mad e by all parti e s shall b e maintain e d individ
ually on a p e rp e tual basis in tho lodger, or
group of accounts in ' i^ 'hich the details relating
to the general fixed aasots of tho area program
or ito non profit oontraot ag e ncy or e main
toined; and
(11) except as provided in Paragraph (a) of this
Rule, Thomas S. Operating funds shall not be
used to serve other than Thomas S clients.
(c) Funds provided by the Division for Thomas S.
services shall not be used to purchase client personal
possessions or clothing unless:
(1) a unique situation has been documented;
(2) this expenditure caimot be covered from another
source.
(d) Start-up funds, defined as funding provided to
estabUsh or prepare a facility or program for the provision
of services, are required to be settled on an expenditure
basis, may be provided to an area program or contract
provider providers, including contract providers under direct
contract with the Division, in accordance with the following
provisions:
(1) Expenditures for start-up may be approved in
accordance with Paragraph (b) of this Rule with
the following restrictions:
(A) vehicles are allowable expenditures if:
(i) no other method of transf>ortation is avail-
able;
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1472
PROPOSED RULES
(ii) other methods are cost prohibitive; or
(iii) at least four Thomas S. Clients will re-
ceive transportation services from the
vehicle.
(B) furnishings for residential and day services
shall be limited to functional items and shall
not include stereos, video cassette recorders,
microwaves or similar items unless program-
matic benefit is established;
(2) Requests for start-up funds shall be made by the
area program, or through the area program in
the case of a contract provider, in whose catch-
ment area the new program or program compo-
nent is being established and is not required to
be client specific;
(3) Request for start-up funding shall be made in
writing to the Division Director at least (90)
days prior to need and shall include a line item
budget and written justification; and
(4) Request for start-up funding may include ex-
penses for normal operations such as staff,
utilities and rent but is limited and may not
exceed (60) days;
(e) Funds provided by the Division to support Thomas S.
services, except as noted m Paragraph (d) of this Rule, shall
be discontinued if the program fails to serve any Thomas S.
cUents for a f>eriod of 45 consecutive days. An extension of
time is approved in writing by the Division Director.
(f) Funds shall be awarded to the area program by the
Division based on need and the availability of funds. The
annual budget for the programs serving Thomas S. clients
shall be budgeted in a separate cost center. Such cost
centers shall include all sources of revenue which support
the costs of Thomas S. clients.
(g) Thomas S. Class members, as defmed in Subpara-
graphs (a) (1) and (2) of this Rule, shall not be excluded
from participating in programs or services for which they
are eligible and which are funded from other sources.
(h) The area program and contract provider shall provide
financial and cUent data regarding Thomas S. Services to the
Division according to instructions from the Division.
a fixed, regular and adequate residence:
(2) An individual who has a primary residence that
is:
(A) a supervised publicly or privately operated
shelter designed to provide temporary living
accommodations: or
(B) a facility that provides a temporary residence
for individuals who would otherwise be institu-
tionalized; or
(C) a public or private place not designated for, or
ordinarily used as a regular sleeping accommo-
dation for human beings;
(3) Homelessness does not include any individual
imprisoned or otherwise detained under federal
or state law.
(c) Eligible adults are individuals who are 18 years of age
or older and who have long term, severe disabling mental
illness. Long term severe mental illness is defined as a
serious and persistent mental or emotional disorder, e.g..
schizophrenia, severe depression, manic-depressive disorder,
etc. that disrupts functional capacities for relationships and
work or school. Persons with long term mental illness
complicated by alcohol and or drug abuse problems and
individuals who are both mentally ill and mentally retarded
are also eligible recipients.
(d) Ehgible children are individuals under the age of 18
who either:
(1) have an emotional disturbance of such severity
as to significantly interfere with functioning
within the family, school or community environ-
ment and to require intensive intervention by
mental health or other related agencies: or
(2) are at high risk of severe emotional disturbance
because of severe mental illness or substance
abuse in the immediate family or excessive
disruption of normal educational and develop-
mental process: or
(3) are in addition to mental illness, also suffering
from an added disability, such as neurological
impairment, chemical dependency and or mental
retardation.
Statutory Authority G.S. 122C-147; 122C-150.
. 1 149 PATH HOMELESS GRANT
(a) The Division shall administer a program of grants for
children and adults to area programs called Path-Homeless
Grant.
(b) These funds shall be used to provide comprehensive
services for homeless individuals who have chronic mental
illness. Path-Homeless Grant funds shall be used to develop
community mental health and related services to provide
treatment and support to homeless mentally iU adults and
children consistent with the provisions of Public Law 100-
77. Title VI. Subtitle R, Part C and within the following
guidelines:
(1) Homelessness is defined as individuals who lack
Statutory Authority G.S. 122C-141; 122C-143.1; 122C-
143.2; 122C-47; 122C- 147.1; 122C- 147.2; Public Law 100-
77, Title IV, Subtitle B, Part C.
.1150 GOVERNOR'S SUBSTANCE ABUSE
PREVENTION PROGRAM
(a) The Division shall administer a program of grants for
children and adolescents to area programs called the
Governor's Substance Abuse Prevention Program.
£b) These funds shall be used to provide targeted primary
prevention, services to children and adolescents who are
high risk for alcohol or other drug abuse.
(c) Eligible individuals are children who have reached the
age of five but not 18 years of age who are not currently
abusing substances but have a primary disability of sub-
1473
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
stance abuse of Subparagraph (cy2) of this Rule and a level
of eligibility of Subparagraph (c)(4) of this Rule and have
one or more of the following high risk factors:
(1) is a school drop out.
(2) has experienced repeated failure in school.
(3) has become pregnant.
(4) is economically disadvantaged.
(5) is the child of drug or alcohol abusers.
(6) is a victim of sexual, physical or psychological
abuse.
(7) has committed a violent or delinquent act.
(8) has experienced mental health problems.
(9) has attempted suicide.
(10) has experienced long term physical pain due to
injury, or
(11) is a juvenile in a detention facility within the
state.
Statutory Authority G.S. 122C-141; 122C-143.1; 122C-
143.2; 122C-147; 122C-147.1; 122C-147.2; General
Education Provision Act, Education Department; General
Administrative Regulations in 34 Code of CFR, Part 74,
Part 76 and Part 77; and the Drug Free Schools and
Community Act of 1986 and its amendments.
.1151 CAROLINA ALTERNATIVES
(a) The Division may contract with area programs to
implement a managed care program for mental health and
substance abuse services for children pursuant to a waiver
granted by die Secretary of the United States Department of
Health and Human Services in accordance with Title XD( of
the Social Security Act, known as the Carolina Alternatives
program.
(b) Funding will be made available through monthly
capitation payments received from the Division of Medical
Assistance. Capitation receipts to die Division will be based
on pre-established Universal Capitation Rates and current
enrollment eligibility information. Division payments to
area programs will be based upon pre-established area
program specific capitation rates and current enrollment
eligibility information.
(c) Funds are awarded and settled based on the provisjons
in the contract between the Division and the area program.
Statutory Authority G.S. 122C-141; 122C-143.1; 122C-
143.2; 122C-147; 122C-147.1; 122C-147.2; Social Security
Act, Waiver under Sections 1915(b) and (b)(4).
.1152 CLOZAPINE
(a) The Division shall administer a program for the
reimbursement of area programs for the purchase of the
drug Clozaril for the treatment of eligible patients suffering
from schizophrenia.
(b) Funds shall be used for the reimbursement for
laboratory services, pharmacy dispensing fees and for the
price of the drug identified as Clozapine or Clozaril in a
manner prescribed by the Division.
(c) Eligible clients are individuals who have a diagnosis
of schizophrenia and are:
(1) Medicaid eligible but have a spend down re-
quirement (Division funds may be used during
the spend down period and count toward the
spend requirement):
(2) not Medicaid eligible but who meet the federal
poverty threshold:
(3) discharged from a state psychiatric hospital on
the drug Clozapine.
(d) Funds are paid and settled in a manner prescribed by
the Division Director.
Statutory Authority G.S. 122C-141; 122C-143.1; 122C-
143.2; 122C-147; 122C-147.1; 122C-147.2.
.1153 COMMUNICABLE DISEASE RISK/
SERVICES TO INTRAVENOUS
aV) DRUG USERS
(a) The EHvision shall administer a program for substance
abuse services to adolescents or adults who inject controlled
substances: or have sexual contact with partners who inject
controlled substances, including methadone: or have tested
positive for Human Immunodeficiency Virus (HIV).
Acquired Immune Deficiency Syndrome (AIDS). Hepatitis
Bi Hepatitis C. sexually transmitted diseases or tuberculosis:
or who have engaged in high risk behaviors with identified
substance abusers.
(b) Funds shall be used for the provision of services in
accordance with the special conditions in the Memorandum
of Agreement or Summary of Significant Federal Require-
ments.
(c) Funds are awarded, paid and settled in a manner
prescribed by the Division Director.
Statutory Authority G.S. 122C-141; 122C-143.1; 122C-
143.2; 122C-147; 122C-147.1; 122C-147.2.
.1154 TREATMENT ALTERNATIVES FOR
WOMEN
(a) The Division shall administer a program to provide
comprehensive services to substance abusing pregnant
women or substance abusing women with dependent
children.
(b) Services may include primary medical, prenatal and
pediatric care immunization, child care, transportation,
gender specific substance abuse treatment and therapeutic
intervention for children that address their developmental
needs.
(c) Funds shall be used for the provision of services in
accordance with the special conditions in the Memorandum
of Agreement or Summary of Significant Federal Require-
ments.
(d) Funds are awarded, paid and settled in a manner
prescribed by the Division Director.
Statutory Authoruy G.S. 122C-141; 122C-143.1; 12C-143.2;
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NORTH CAROLINA REGISTER
November 1, 1995
1474
PROPOSED RULES
122C-147; 122C- 147.1; 122C-147.2.
.1155 UNIT COST REIMBURSEMENT
(UCR) CHILD ANfD ADULT
(a) The Division shall administer a system of reimburse-
ment of state, federal and other funds to area programs for
eligible children and adult clients based on the provision of
eligible mental health, developmental disabilities and
substance abuse services. These payments exclude those
services paid for under either the Willie M. or Thomas S^
unit cost reimbursement systems.
(b) This system of funding shall be based on a consis-
tently applied methodology which includes the following:
(1) the identification of service expense centers.
(2) the allocation of allowable costs.
(3) the determination of expected units of service,
(4) the calculation of a unit cost reimbursement rate.
(5) the identification and assignment of revenue
(6) the reporting of units of service and revenue,
(7) the reimbursement of flinds. and
(8) settlement procedures.
(c) The procedures established for UCR are stated in the
Pioneer Funding System Operating Manual, Volumes I
through IV.
(d) Funds shall be used for the provision of services in
accordance with the Memorandum of Agreement.
Statutory Authority G.S. 122C-141; 122C-143.1; 122C-
143.2: 1 22C- 1 47;' 122C- 147.1; 122C-147.2; 122C-151.1.
.1156 SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT
(a) TTie Division shall administer a grant program for the
federal Substance Abuse Prevention and Treatment Block
Grant which is made available to the Division under the
authority of Public Law 102-321 Subpart II.
(b) The appropriate portion of funds in the block grant
which are made available to the Division for substance
abuse treatment and prevention services shall be used to
make grants to eligible programs for the provision of
comprehensive services.
(c) To be eligible to receive block grant funds, an area
program shall provide the following services:
(1) outpatient services, including specialized outpa-
tient services for children and adults who have
substance abuse disorders or who are at risk for
substance abuse and residents of its service area;
(2}
14]
tl)
24 hour-a-day emergency care services:
day treatment or other partial hospitalization
services;
screening for patients being considered for
admission to stale facilities to determine the
appropriateness of such admission;
consultation, education, and primary prevention
services;
(6) TB screening and referral in accordance with
federal requirements; and
(7) Specialized substance abuse services for preg-
nant and parenting women and adolescents,
(d) On a statewide basis, block grant funds for alcohol
and drug services shall be expended in accordance with the
following:
(1) At least 35 percent of the funds for alcohol and
drug services shall be expended for programs
and activities related to alcoholism and alcohol
abuse;
(2) At least 35 percent of the funds for alcohol and
drug services shall be expended for programs
and activities relating to drug abuse;
(3) At least 20 percent of the amount used for
alcohol and drug abuse services shall be ex-
pended for primary prevention and early inter-
vention programs designed to discourage the
abuse of alcohol, tobacco and other drugs. In
order to ensure compliance with this require-
ment, each area program must expend no less
than 20 percent of its allocation of SAPT-BG
funds on primary prevention activities as out-
lined in the Memorandum of Agreement and
Summary of Significant Federal Requirements:
(4) The state must spend at least five percent of the
annual SAPTBG amount to provide outreach
intervention services for IV Drug Users using
one of the following three models developed by
NIDA:
(A) Standard Intervention Model for Injecting Drug
Users (NIDA);
(B) Health Education Model;
(C) Indigenous Leader Outreach Model:
(Section 1924 ; Requirements Regarding
Tuberculosis and Human Immunodeficiency
Virus)
(5) Treatment services designed for pregnant women
and women with dependent children shall be
increased at a rate not less than five percent for
FY 1993. The base for FY 1993 shall be the
FY 1992 alcohol and drug services block grant
expenditures and State expenditures for pregnant
women and women with dependent children and
to this base shall be added the five percent of the
FY 1993 grant amount for alcohol and drug
treatment services. For FY 1994. the State shall
spend five percent more than the FY 1993 total
expenditure for pregnant women and women
with dependent children. For grants beyond FY
1994, the State shall expend no less than the
amount equal to the amount expended by the
State for FY 1994. States shall report their
methods to calculate their base for FY 1992
expenditures on treatment for pregnant women
and women with children;
(Section 1922 Set Aside for Women With De-
pendent Children)
The Division shall review expenditures and if the percentage
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NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
requirements for services and prevention specified in
Subparagraphs (d)(\^. (D. (3) and (4) of this Rule are not
met, the Division shall require changes in area program
expenditure patterns to meet these federally mandated
requirements.
(e) Non-Eligible Expenditures Funds shall not be ex-
pended for any of the following purposes:
(1) to provide inpatient hospital services, unless a
physician has certified that the clients primary
diagnosis is substance abuse, the individual
cannot be safely treated in a non-hospital setting.
the daily rate charged does not exceed the rate
charged by a comparable non-hospital service.
and the service is medically necessary:
(2) to make cash payments to clients:
(3") to purchase or improve land, purchase, construct
or permanently improve any building or other
facility, or purchase major medical equipment;
(4) to satisfy any requirement for the expenditure of
non-federal funds as a condition for the receipt
of federal funds;
(5) to provide assistance to any entity other than a
public or non-profit private entity;
(6) to provide individuals with hypodermic needles
or syringes so that such individuals may use
illegal drugs; or
(7) to su pport any individual salary in excess of one
hundred twenty five thousand dollars
($125.000).
£f) The Divisiog Director shall allocate annually funds to
the area programs. The funds shall be included in the
Annual Service Plan and Memorandum of Agreement.
(g) Block grant funds allocated shall be used to su pple-
ment and increase the level of state, local, and other
non-federal funds and shall, in no event, su pplant such state,
local, and other non-federal funds. The Division shall
monitor compliance by comparing total budgeted revenues
for tiie current fiscal year with those budgeted for the prior
fiscal year for each area program exclusive of block grant
fiinds. If block grant funds are reduced, the area program
may reduce its participation in a proportionate manner.
Statutory Authority G.S. 122C-150; P.L. 102-321, Subpart
11.
.1157 NON UNIT COST REIMBURSEMENT
(a) The Division may provide specific purpose funding
with state, federal or other sources for activities authorized
by the division and the granting agency and disburse these
funds on a basis other than unit cost reimbursement.
(b) Funds shall be expended in accordance with the
special conditions set forth in the Memorandum of Agree-
ment between the area program and Division.
(c) Funds shall be settled on an expenditure basis in
accordance with Rule .1014 of this Subchapter.
(d) Non Unit Cost Reimbursement shall be available for
child, adult and other services.
(1) Unless more narrowly defined in the allocation
letter, fimds for children shall be for individuals
under the age of ^8 years.
£2) Unless otherwise defined in the allocation letter.
fiinds for adults shall be for individuals 18 years
of age and older.
(3) Funds which cannot be identified for services to
children or adults shall be considered "other".
Statutory Authority G.S. 122C-147.
.1158 TRAUMATIC BRAEV INJURY
(a) The Division shall administer a program to provide
periodic, day/night and 24 hour community based services
to children and adults with traumatic brain injury.
(b) Eligible recipients are individuals who have a trau-
matic brain injury resulting fixam a sudden insult to the brain
caused by external physical force and who have substantial
functional limitations according to the DP Adult Eligibility
Screening Inventory.
(c) Funds shall be used for the provision of services in
accordance with the allocation letter and any special condi-
tions in the Memorandum of Agreement or Summary of
Significant Federal Requirements.
(d) Funds are awarded and paid in a manner prescribed
by the Division Director.
Statutory Authority G.S. 122C-141; 122C-143.1; 122C-
143.2; 122C-147; 122C-147.1; 122C-147.2.
.1159 REVOLVING LOAN
(a) The EHvision may, upon authorization from the Office
of Budget and Management, make available funds for loans
to provide for the implementation of new community based
programs and services.
(h) Authorization will be based on a minimum of written
justification explaining the need for the loan: a detailed list
of expenditures to be incurred; a detailed list of receipts to
be received and a repayment plan a pproved by the Division.
(c) Funds shall be used only for expenditures authorized
by the Division.
(d) Funds are awarded and paid in a manner prescribed
by the Division Director.
Statutory Authority G.S. 122C-141; 122C- 143.1; 122C-
143.2; 122C-147; 122C-147.1; 122C-147.2.
.1160 DOMICILLUIY CARE
(a) The Division shall administer a program of payments
to area programs for services to clients residing in domicili-
ary care facilities, excluding DDA group homes.
(b) Such funds shall be used to make incentive payments
for Medicaid covered services rendered to Medicaid eligible
clients in domiciliary care facilities, including outpatient
treatment (individual and group), evaluation, case consulta-
tion, day treatment, screening, case management and psycho
social rehabilitation services to adults.
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1476
PROPOSED RULES
(c) The service must he provided by m area program, or
under contract to an area program. The staff member
providing the service must be privileged by the area pro-
gram to provide the service and documented according to
Client Service Record manual requirement.
(d) Eligible clients shall be an adult resident of a licensed
Familv Care Home or home for the Aged and Medicaid
eligible.
(e) Funds are awarded and paid in a manner prescribed
by the Division Director.
Statutory Authority G.S. 122C-112; 122C-143.1.
SUBCHAPTER 14D - POLICIES ON INPATIENT
AND RELATED SERVICES
.0006 USE OF DIVISION FUNDS FOR
INPATIENT SERVICES
(a) Inpatient funding for the purchase of services from
local inpatient providers and medical doctors shall meet the
following requirements:
(1) Program Requirements
(A) Tho Divioion may allocat e fundo to Division
funds may be used by area programs for the
purchase of community inpatient care with
local providers. The allooation of ouoh fundo
shall bo boo e d on th e area program's annual
plan. All patients to be served under the plan
shall be accepted as patients of the area pro-
gram. Such a patient is one who is assigned
an area program client record number, has a
master client record card and services rendered
are documented in a client record in accor-
dance with are program standards requirements
in 10 NCAC 18A .0310 and .0311. Area
authorities shall contract with a local inpatient
provider accredited by the Joint Commission
of Accreditation of Hospitals Organization or
licensed by the Division of Facility Services
and designated by the Division of Mental
Health, Developmental Disabilities and Sub-
stance Abuse Services.
(^ i\roa authoriti d fl shall oontraot with a looal
inpatient provider accroditod by tho Joint
Commission on Accroditfltion of Hospitals
or lio e na e d by th e Departm e nt of Human
Rooourooo or Divioion of Facility SoP i 'iooo
and designated by tho Division of Mental
Health, Mental Retardation and Subatnnoo
Abuoo Serviooo.
^ Each ar e a authority int e r e sted in applying
for inpatient funds s hall submit a proposal
for approval to the regional office with
th e ir annual plan and budg e t. — Inoluded in
th e proposal shall b e a propos e d oontraot
botv i 'oen tho area authority and tho local
inpatient provider.
(S) — Priorit>' in allocating funds shall bo given to
thoBo program which:
(i) hav e e vid e no e d abilit)' to d e or e ai) e admio
oiona to state regional faoilitioo or which
propose to dooroaoo admiooiono to state
regional facilities by proi i 'iding oommunit)'
inpati e nt o e rvio e o;
(ti) have a written admiaoion and diochargo
procedure that mooto tho roquiroments of
th e division otimdard s for area progrom sr
(iii) bavo an operational plan to oor^' e indigont
and/of minority populations; or
(tv) show a roadinosfl to develop an inpatient
d e toxification — program for alcohol — emA
drugs.
(€) — The number of da)'s required for inpatient
hospitalization shall not oxoood tho stimdxirds
00 s e t by PSRQ for appropriat e l e ngth of stay.
PSRQ reports shall b e mad e availabl e upon
roquost to tho area programo and for Depart
mont of Human Rosourcos progrom reviews
and audits.
(B) (D) Non-residents of the State of North Caro-
lina may receive inpatient care under the area
program inpatient program only under emer-
gency situations. An emergency situation
would be where a person needs immediate
hospitalization which cannot be delayed until
he is transported to an appropriate inpatient
facility within his resident state.
CO (E) An area authority may contract with pri-
vate psychiatrists or other medical doctors to
provide professional services in inpatient
settings. Such contracts shall be in accordance
with Section 23n and Section 25 .1010 of
APSM 75-1. act as attending physicians for tho
local inpatient program when insufficient area
program e mploy e d phyoioiano ar e available to
provid e th e r e quir e d oov e rog e . — i\ll oontraoto
for inpatient sorvicoa by physicians shall bo in
accordance with Section 23 of Area Program
Budg e ting — ond Proo e dur e s Manual of th e
Division (APSM 75 1), adopt e d pursuant to
G.S. 150B 1 4 (c).
(D) fF) Part-time consultant medical doctors em-
ployed by the area program for non-inpatient
care may also be contracted to provide inpa-
tient care. The area director shall assure that
there will not be a conflict, such as dual pay-
ment, between the part-time physician's em-
ployment for outpatient care and his or h e r
participation in the inpatient program. In all
cases, prior authorization shall bo given by tho
division v . h e r e th e combin e d dayo of e mploy
m e nt for consultants exceed two days p e r
wook.
(E) fG) For patients treated by the provider,
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NORTH CAROLINA REGISTER
November 1, 1995
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PROPOSED RULES
)
foimburoomont Use of Division funds for
inpatient services shall be limited to services
for alcohol and and/or drug detoxification and
for treatment of emotional disorders.
(2) Fiscal Requirements:
(A) A written contract between the area authority
and the provider and/or ef attending medical
doctor shall be negotiated and submitted to th e
division, established in accordance with 10
NCAC 14C .1010. The contract shall contain,
at a minimum, provisions which deal with such
matters as payment for patient; responsibility
for reimbursement; services to be provided;
responsibility for patient admission; records;
statistical information; posting of payments;
and maintenance of patient care cost.
(B) — Whore division funds which require local
matching funds aro uood to oontraot for looal
inpati e nt oar e , the following oourooo shall b e
accepted as local matching funds:
(i) First and third party reimbursement re
o e iv e d by the inpati e nt facility for oost
inourr e d for th e treatm e nt of ar e a — pre-
gram patients; (First and third party
sorviooB may bo combined from Bovoral
inpatient faciliti e s within an ar e a whioh ia
treating ar e a program pati e nts.); and
(ii) local funds derived by the area program
and designated for roimbursement to com
munit)' inpati e nt faciliti e s for th e ooot of
inpatient treatment (Looal matohable funds
are those funds appropriated — by local
govommonts, fees for sor i 'ioos rendered,
and other non state and non f e d e ral funds).
(B) (3) Requirement for Inpatient Facilities Reim-
bursement:
(i) fA^ Reimbursement to the inpatient pro-
vider for alcohol and and/or drug detoxifi-
cation or emotional disorders shall not
exceed the lesser of the following:
(I) ^ the difference between any first er
and/or third party payments or both
collected and the approved all Inclusive
prospective medicaid reimbursement
rate for the provider on an individual
patient basis; or
(ID ^ charges for inpatient services. The
medicaid rate to be reimbursed shall be
the effective rate at date of discharge.
The inpatient provider shall follow
usual collection procedures for each
patient before billing the area program.
(ii) (^ A request for reimbursement for inpa-
tient cost shall be submitted by the pro-
vider to the area program which will be
the basis for reimbursement. The area
progmm shall use a form as proocribod by
the divi s ion.
(C) f4) Requirements for Attending Physician
Reimbursement:
(i) fA^ Area authorities which elect to con-
tract with medical doctors for the provi-
sion of inpatient services shall use one of
the following two methods to reimburse
the medical doctor for his his/her services:
(I) (i) The area program shall pay the
medical doctor at his medicaid provider
rate or usual and customary charge
until a medicaid provider rate is estab-
lished for all services rendered. Under
this method, the fte area program
shall bill all first and third party payors
for all services rendered and retain all
receipts.
(II) (ii) The medical doctor shall bill all
first and third party payors for the area
program patient or his inaumnoo oarriof
or medicare and medicaid fiseal inter
m e diar^' for all services rend e r e d and if
th e m e dical doctor io unabl e to ooUoot
from the patient or his insuronoe oar
rior or medicare and medicaid fiscal
intermediary th e rendered. The medi-
cal doctor shall request reimbursement
from the area program for any
unreimbursed care, up to his medicaid
provider rate.
(ii) (B) Full-time medical doctors employed by
the area program may be eligible for
payment from inpatient funds according to
the area policy for reimbursement of phy-
sicians providing on-call, extended duty
and emergency call-back services. The
area policy shall be included in the "other
pay" provisions submitted to the State
Personnel Director. These provisions are
in addition to the regular pay plan submit-
ted and may be submitted separately,
(b) Tlie area program is not required to make a cost
settlement with the local inpatient provider for fiscal year
19 8 2 8 3 and subsequent fiscal years .
Statutory Authority G.S.122C-J12; 122c-l47; 122c-148.
******************
Notice is hereby given in accordance with G.S.
150B-21.2 that the Director of the Division of Mental
Health, Developmental Disabilities and Substance Abuse
Services proposes to develop rules in accordance with 1995
Session Laws Chapter 249 on the following subjects related
to Eligible Assaultive and Violent Children: (1) Determina-
tion of eligibility and ensuring provision of services for
eligible and assaultive children pursuant to G.S. 122C-
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NORTH CAROLINA REGISTER
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1478
PROPOSED RULES
112(a)(14); (2) Prior notice pursuant to G.S. 122C-196;
and (3) Administrative review by Review Officer pursuant
to G.S. 122C-199. The agency will subsequently publish in
the Register the text of the rules it proposes to adopt as a
result of the public hearing and of any comments received on
the subject matter.
Proposed Effective Date: May 1, 1996.
A Public Hearing will be conducted at 10:00 a.m. on
November 16. 1995 at the Willie M. Services, 3509 Haworth
Drive, 3rd Floor Conference Room, Raleigh, NC 27609.
Reason for Proposed Action: To adopt rules in accor-
dance with G.S. 122C-]12(a)(14) as set forth in the 1995
Session Laws Chapter 249 for determining eligibility,
ensuring the provision of services, and providing for con-
tested case hearings for eligible assaultive and violent
children.
Comment Procedures: Please submit written comments to
Charlotte F. Tucker, Division of Mental Health, Develop-
mental Disabilities and Substance Abuse Services
(DMH/DD/SAS), 325 N. Salisbury Street, Albemarle Bldg. ,
Suite 558, Raleigh, NC 27603-5906, FAX 919-733-8259.
You may preseru oral or written comments at the November
16, 1995 public hearing; however, time limits may be
imposed by the Hearing Officer. The deadline for written
comments is November 15, 1995.
Notice is hereby given in accordance with G.S.
150B-21.2 that the Department of Human Re-
sources/Division of Medical Assistance intends to amend rule
cited as 10 NCAC 26K .0006; and adopt rules 10 NCAC
50D .0101 - .0103. .0201, .0301 - .0302, .0401 - .0402,
.0501 - .0503.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conducted at 1:30 p.m. on
December 1, 1995 at the NC Division of Medical Assistance,
1985 Umstead Drive, Kirby Building, Room 132, Raleigh,
NC.
Reason for Proposed Action:
10 NCAC 26K .0006 - This rule clarifies when a provider
may bill a patient who is a recipient of Medicaid.
10 NCAC SOD .0101 - .0103, .0201, .0301 - .0302, .0401 -
.0402, .0501 - .0503 - These rules are necessary to imple-
ment Medicaid estate recovery. OBRA 1993 mandated
estate recovery and enabling state legislation to effect this
mandate was needed. G.S. 108 A- 70. 5 was passed in July
1994 and authorizes estate recovery.
Comment Procedures: Written conwients concerning this
rule-making action must be submitted by December 1, 1995,
to Portia Rochelle, APA Coordinator, Division of Medical
Assistance, 1985 Umstead Drive , Raleigh, NC 27603. Oral
comments may be presented at the hearing. A fiscal note
statement is available upon written request from the same
address.
Fiscal Note: These Rules do not affect the expenditures or
revenues of local government or state funds.
CHAPTER 26 - MEDICAL ASSISTANCE
SUBCHAPTER 26K - TITLE XIX APPEALS
PROCEDURES
.0006 PROVIDER BILLING OF PATIENTS
WHO ARE MEDICAID RECIPIEP«JTS
(a) Excopt 03 providod for in Paragraph (d) of thi s Rulo,
providers shall not bill Modiooid rocipienta for any Medicaid
oovered oeP i 'icx s o provid e d to r e oipi e nta unl e oo tho providor
has op e oifioolly inform e d the rooipiont and th e r e oipi e nt has
sf)ocifically undorstood ho will bo charged for tho sor^'icoa.
fb) — A providor may not bill a Modicaid rooipiont for
Medicaid o e r . 'io e o for which it r e o e iv e o no r e imburoomont
from th e state ag e ncy b e oauo e th e provid e r fail e d to follow
program rogulationa.
fe3 — A providoF who accopta a pmtiont oa a Modicaid
pati e nt agre e o to accept M e dicaid paym e nt plus any autho
riz e d oo paym e nt and third part)' paymopt as ptayment in
full, oxeopt that a providor may not dony sorvicoo to any
Medicaid pationt on account of the individual's inability to
pay tho oo pay amount.
{4) — Provid e rs may bill th e r e oipient whon thoy or e 65
yoars of ago or oldor and qualify' for Modicaro bonofits, but
fail to supply thoir Modicaro numbor as proof of oovorago.
(a) A provider may refuse to accept a patient as a
Medicaid patient and bill the patient as a private pay patient
only if the provider informs the patient that the provider will
not bill Medicaid for any services but will charge the patient
for all services provided.
(b) Acceptance of a patient as a Medicaid patient by a
provider includes, but is not limited to, entering the patient's
Medicaid number or card into any sort of patient record or
general record-keeping system, obtaining other proof of
Medicaid eligibility, or filing a Medicaid claim for services
provided to a patient. A patient must request acceptance as
a Medicaid patient by:
(1) presenting the patient's Medicaid card or pre-
senting a Medicaid number either orally or in
writing; or
(2) stating either orally or in writing that the patient
has Medicaid coverage: or
(3) requesting acceptance of Medicaid upon ap-
proval of a pending application or a review of
continuing eligibility.
(c) Providers may bill a patient accepted as a Medicaid
patient only in the following simations:
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NORTH CAROLINA REGISTER
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PROPOSED RULES
(1) for allowable co-payments or deductibles as
specified under 10 NCAC 26C .0003: or
(2) before the service is provided the provider has
informed the patient that the patient may be
billed for a service that is not one covered by
Medicaid regardless of the type of provider or is
beyond the limits on Medicaid services as speci-
fied under 10 NCAC 26B. 10 NCAC 26C. and
10 NCAC 26D; or
(3) the patient is 65 years of age or older and
qualifies for Medicare benefits, but has failed to
supply a Medicare number as proof of coverage:
or
(4) the patient is no longer eligible for Medicaid as
defined in 10 NCAC 50B.
(d) When a provider files a Medicaid claim for services
provided to a Medicaid patient, the provider may not bill the
Medicaid patient for Medicaid services for which h receives
no reimbursement from Medicaid when:
(1) the provider failed to follow program regula-
tions: or
(2) the agency denied the claim on the basis of a
lack of medical necessity: or
(3) the provider is attempting to bill the Medicaid
patient beyond the situations stated in Paragraph
(c) of this Rule.
(e) A provider who accepts a patient as a Medicaid
patient agrees to accept Medicaid payment plus any autho-
rized co-payment and third party payment as payment in full
for all covered services provided, except that a provider
may not deny services to any Medicaid patient on account
of the individual's inability to pay co-payments as specified
under 10 NCAC 26C .0003.
(f) When a provider accepts a private patient, bills the
private patient personally for Medicaid services covered
under Medicaid for Medicaid recipients, and the patient is
later found to be retroactively eligible for Medicaid, the
provider must:
(1) continue to bill the patient as a private pay
patient on the condition that the provider follows
Paragraph (a) of this Rule: or
(2) accept the patient as a Medicaid patient, bill all
Medicaid covered services provided the patient
to Medicaid, and conform to the requirements in
Paragraphs (a), (h), and (c) of this Rule: or
(3) if a patient has received and paid for services
and is then made retroactively eligible for Med-
icaid, the provider may file for reimbursement
with Medicaid. Upon receipt of Medicaid
reimbursement the provider must refund to the
patient all money paid by the patient for the
services covered by Medicaid.
Authority G.S. 108A-25(b); 108A-54; 150B-11; 42 C.F.R.
447. 15.
CHAPTER 50 - MEDICAL ASSISTANCE
SUBCHAPTER SOD - ESTATE RECOVERY
SECTION .0100 - RECIPIENTS SUBJECT
TO ESTATE RECOVERY
.0101 NOTICE OF ESTATE RECOVERY
(a) An individual who applies or reapplies on or after
October 1. 1994 under Medicaid disabled or aged categories
shall be given a written notice at the time of a pplication that
a claim may be filed against their estate, if one exists, to
recover Medicaid payments made on his behalf.
(b) Notice shall be on a form prescribed by the Division
of Medical Assistance and shall explain:
OJ The types of Medicaid payments subject to estate
recovery: and
(2) That recovery will not be claimed if the individ-
ual is survived by a legal spouse, childfren)
under age 21 or blind or disabled child(ren') of
any age who became blind or disabled before
age 21 and still live on the property of the
individual.
Authority G.S. 108A-70.5; 42 U.S.C. 1396p.
.0102 PERMANENTLY INSTITUTIONALIZED
Recovery shall app ly to the estates of individuals under
age 55 who seek Medicaid coverage for costs of care in a
medical institution and who cannot reasonably be expected
to be discharged to return home.
(1) For purposes of estate recovery, medical institu-
tion means licensed nursing facilities, intermediate
care for the mentally retarded facilities, nursing
facility level of care in hospitals, inpatient care in
a general or psychiatric hospital or mental institu-
tion.
(2) A determination that an individual cannot reason-
ably be expected to be discharged to return home
is made when the individual seeks placement in or
has been admitted to a medical institution using
the following evidence:
(a) Admission forms for level of care, physician
written statement of discharge plans, or plans of
care which indicate care needs are permanent or
of indefinite duration, or
(bl Individual continues to be a resident of a medi-
cal institution at the end of a temporary stay
predicted by his physician at the time of admis-
sion to be no longer than six months in duration.
(3) Notice of the determination that the individual is
residing in a medical institution on a permanent or
indefinite basis shall be given to the individual, or
to his parent/ guardian/responsible person if the
individual is incompetent, within three work days
after the determination.
(4) The individual or his parent/guardian/responsible
person may request a reconsideration review of
the determination under Section .0200 of this
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PROPOSED RULES
Subchapter.
Authority G.S. 108A-70.5; 42 U.S.C. I396p.
.0103 AGE 55 AND OVER
(a) Recovery shall apply to the estates of individuals who
on or after reaching age 55 seek Medicaid coverage for care
in a medical institution or under a home and community
based alternative program for individuals who would
otherwise qualify for care in a medical institution.
(Tj) Written notice that the state may file a claim against
their estate to recover the payments made by the Medicaid
Program on their behalf shall be given to individuals at the
time of approval of eligibility for care in a medical institu-
tion or approval for home and commimity based alternatives
services.
Authority G.S. 108A-70.5; 42 U.S.C. 1396p.
SECTION .0200 - RECONSIDERATION REVIEW
.0201 RECONSIDERATION REVIEW
(a) The recipient or his parent/guardian/responsible
person acting on behalf of the recipient may request recon-
sideration of the determination that the individual cannot
reasonably be expected to be discharged to return home
based on relevant evidence stated in Rule .0101 of this
Subchapter.
(b) A reconsideration review shall be requested in writing
to the Division of Medical Assistance estate recovery
administrator within 30 calendar days of the determination
and written notice provided by the county department of
social services.
(c) Within 30 calendar days of a written request for
reconsideration of the determination of permanent institu-
tionalization, the estate recovery administrator shall establish
a reconsideration date and conduct a review of:
(1) All evidence considered by the county depart-
ment of social services in making a determina-
tion of permanent institutionalization, and
(2) Information provided in writing or by telephone
conference with the recipient or an individual
acting on behalf of the recipient.
(d) The review shall be conducted in the Division of
Medical Assistance offices and may include a telephone
conference with the recipient or an individual acting on
behalf of the recipient if oral testimony is requested.
(e) A decision shall be made and provided in writing to
the recipient or an individual acting on behalf of the
recipient within 15 calendar days of the date of the reconsid-
eration review.
(f) If the recipient disagrees with the decision of the
reconsideration review, he may appeal to the Office of
Administrative Hearings (OAH) within 30 calendar days of
receipt of the reconsideration review decision. If no appeal
to OAH is filed, the reconsideration review decision is final.
Authority G.S. 108A-70.5; 42 U.S.C. 1396p.
SECTION .0300 - MEDICAID
PAYMENTS SUBJECT TO RECOVERY
.0301 PERMANENTLY INSTITUTIONALIZED
(a) Recovery shall be claimed for all Medicaid payments,
including cost sharing charges for Medicare services and
Medicare premiums, made on behalf of individuals for the
period of time the individual received care in a medical
institution, whether or not such periods were consecutive.
The amount of recovery is limited to the amount of Medic-
aid payments for services and benefits described herein.
(b) No recovery will be claimed for any period of time
the recipient was discharged from a medical institution and
lived in the community for a period of 30 or more consecu-
tive days.
(c) No recovery will be claimed if the recipient is
survived by one or more of the relatives listed in Section
.0100 of this Subchapter.
(d) No recovery will be claimed if the Division of
Medical Assistance determines under provisions of Section
.0500 of this Subchapter that it is not cost effective or if
recovery would create undue hardship to a survivor.
Authority G.S. 108A-70.5; 42 U.S.C. 1396p.
.0302 AGE 55 and OVER
(a) Recovery shall be claimed for Medicaid payments for
the following services and benefits:
(U Nursing facility level of care;
Home and community based alternatives ser-
vices;
£2}
m
Hospital inpatient and outpatient care received
during approved care under either Subparagraph
£1} or £2] of this Paragraph;
£4} Prescription drugs received during approved care
under either Subparagraph (1) or (2} of this
Paragraph; and
(51 Medicare premiums paid during the time of
approved care under either Subparagraph (1) or
(2) of this Paragraph.
(b) The amount of recovery is limited to the amount of
Medicaid payments and benefits described in Paragraph
(a)(l)-(5) of this Rule.
(c) No recovery will be claimed if the recipient is
survived by one or more relatives listed in Section .0100 of
this Subchapter.
(d) No recovery will be claimed if the Division of
Medical Assistance determines under provisions of Section
.0500 of this Subchapter that it is not cost effective or if
recovery would create undue hardship to a survivor.
Authority G.S. 108A-70.5; 42 U.S.C. 1396p.
SECTION .0400 - FILING AND COLLECTION
OF CLAIMS AGAINST ESTATE
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NORTH CAROLINA REGISTER
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PROPOSED RULES
.0401 FILING CLAIM AGAINST ESTATE
(a) Within 60 days after the date of a recipient's death,
the Division of Medical Assistance or its Fiscal agent shall
produce a claim document summarizing all Medicaid
payments subject to recovery as stated in Rules .0301 and
■0302 of this Subchapter.
(b) The claim shall be mailed to ttie county department of
social services from which the individual received Medicaid.
(c) Following a determination that the recipient is not
survived by any of the relatives listed in Section .0100 of
this Subchapter, the county department of social services
shall file the claim by certified mail with the individual who
has been named to administer the estate and shall send a
copy to the clerk of court for his records.
(d) If an administrator of the decedent's estate has not
been appointed at the time the claim is received in the
county, within 30 calendar days the county shall request the
name of the administrator from the clerk of court and shall
file the claim directly with the clerk of court if no a ppoint-
ment has been made.
(e) At any time that the county department of social
services determines that the decedent does not have an
estate, it shall notify the Division of Medical Assistance to
cease recovery efforts.
Authority G.S. W8A-70.5; 42 U.S.C. 1396p.
.0402 COLLECTION OF CLAIMS
(a) Estate for purposes of recovery of Medicaid payments
is defined under G.S. 28A-15-1.
(b) Unless the Division of Medical Assistance waives or
reduces its claim, recovery under rules in Section .0500 of
this Subchapter, recovery shall be claimed in full for the
amount of the Medicaid claim to die extent that assets in the
estate are sufficient to meet the state's claim as a fifth class
creditor.
(c) All recoveries for Medicaid claims shall be remitted
to die Division of Medical Assistance by the administrator
of the decedent's estate, any individual or entity designated
by the clerk of court or by the clerk of court.
(d) Amounts recovered shall be shared by the federal,
state and county governments in proportion to the financial
share of program costs borne by each at the time recovery
is received.
Authority G.S. 108A-70.5; 42 U.S.C. 1396p.
SECTION .0500 - WAIVER OF RECOVERY
.0501 RECOVERY NOT COST EFFECTIVE
Recovery is deemed to not be cost effective and is waived
when:
(1) The amount of Medicaid payments for services
and benefits subject to recovery is less than three
thousand dollars ($3.000.00). or
£2} The assets in the estate are below five thousand
dollars ($5.000.001.
Authority G.S. 108A-70.5; 42 U.S.C. 1396p.
.0502 UNDUE HARDSHIP
(a) Recovery is waived if enforcement of the claim will
cause undue or substantial hardship to the surviving heirs of
the decedent.
(b) Undue or substantial hardship is deemed to exist
when:
(n Real or personal property included in the estate
is the sole source of income for a survivor and
the net income derived is below 75 percent of
the federal poverty level for the dependents of
the survivor(s) claiming hardship, or
(2) Recovery would result in forced sale of the
residence of a survivor who lived in the resi-
dence for at least 12 months immediately prior
to and on the date of the decedent's death and
who would be unable to obtain an alternate
residence because the net income available to the
survivor and his spouse is below 75 percent of
the federal poverty level and assets in which the
survivor or his spouse have an interest are
valued below twelve thousand dollars
($12.000.00).
(c") Undue hardship does not include loss of a pre-existing
standard of living nor the establishment of a source of
maintenance that did not exist prior to the decedent's death,
(d) A claim of undue hardship to a survivor shall be made
in writing to the Division of Medical Assistance estate
recovery administrator within 90 days after the Medicaid
claim has been filed with the administrator or clerk of court.
The claim of hardship must describe the financial circum-
stances of the heir and the basis for his dependence on
assets in
the decedent's estate.
Authority G.S. 108A-70.5; 42 U.S.C. 1396p.
.0503 DETERMINATION OF UNDUE HARDSHIP
(a) The estate recovery administrator shall evaluate each
claim of hardship within 60 calendar days of the request to
make a determination to waive recovery of the claim in part
or in full. In making this determination, the administrator
may request documentation to su pport the survivor's claim
of hardship including prior year's income tax returns, bank
statements, wage and earnings files, real and personal
prop>erty records, utility records, tax records, medical bills,
or other documents offered by the survivor to support his
claim.
(b) If documentation necessary to evaluate the claim of
hardship is not provided or the survivor requests additional
time to obtain the documentation, the administrator may
extend the review for an additional 30 days.
(c) The claim of hardship shall be denied if the necessary
documentation is not provided within the time frames stated
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1482
PROPOSED RULES
in Paragraphs (a) and (h) of this Rule.
(d) The administrator shall notify in writing the survivor
claiming hardship, the administrator and the clerk of court
of his decision within 10 calendar days after completing the
review of the request and documentation supporting the
claim of hardship.
isl If ihs survivor disagrees with the decision, he may
appeal to the Office of Administrative Hearings (OAH)
within 30 calendar days of receipt of the decision. If no
appeal to OAH is filed, the decision is final.
Authority G.S. 108A-70.5; 42 U.S.C. 1396p.
Notice is hereby given in accordance with G.S.
150B-21.2 that the Social Services Commission intends
to adopt rule cited as 10 NCAC 39D .0304; amend rules
cited as 10 NCAC 47B .0404 - .0405 and 10 NCAC 49B
.0102.
Proposed Effective Date: February 1 , 1996.
A Public Hearing will be conducted at 10:00 am on
December 6, 1995 at Albemarle Building, Room 943-2. 325
N. Salisbury Street, Raleigh, NC 27603.
Reasons for Proposed Actions:
10 NCAC39D .0304 - The adoption of this rule will allow
counties more flexibility in scheduling JOBS participants fl^r
Work Experience hours above the maximum hours defined in
45 CFR 250. 63. This will help in meeting the requirements
of the JOBS program which includes the requirement to meet
the Standard and AFDC-UP Participation Rates. The
Altemadve Work Experience Program is expected to have a
positive impact on the participation rates; this will facilitate
the receipt of enhanced federal funds.
10 NCAC 478 .0404 ■ .0405 - During the 1994 Session of
the General Assembly, Medicaid Coverage for Elderly,
Blind, and Disabled was passed which mandates that North
Carolina become a 1634 State for purposes of Medicaid
coverage for the aged, blind, and disabled. This means that
those persons who receive Supplemental Security Income
(SSI) because they are aged, blind, or disabled will automat-
ically be eligible for Medicaid. The State/County Social
Assistance to Adults Program (SA) is defined as a State
supplemental payment program because the program
basically provides cash supplements to SSI recipients. By
complying with all the federal rules governing SSI, SA
recipients remain automatically entitled to Medicaid. SA
reserve and income policies changed as a result of the
legislation. Ttierefore, the rules are proposed for amend-
ment to comply with the changes.
10 NCAC 498 .0102 - The Department of Health and
Human Services allows states to choose to provide AFDC for
18 year old children who are reasonably expeaed to
graduate from school by the time they are age 19. Prior to
August 1 , 1995, North Carolina chose this option and has
provided AFDC for this group of children. During its 1995
Session, the General Assembly passed legislation to remove
this option from North Carolina's AFDC Program. There-
fore, this rule is proposed for amendment to remove the
provision.
Comment Procedures: Comments may be presented in
writing anytime before or at the public hearing or orally at
the hearing. Time limits for oral remarks may be imposed
by the Commission Chairman. Any person may request
copies of these rules by calling or writing to Shamese
Ransome, Special Assistant, North Carolina Division of
Social Services, 325 N. Salisbury Street, Raleigh, NC
27603, 919-733-3055.
Fiscal Note: 10 NCAC 39D .0304 affects the expenditure
or distribution of State funds subject to the Elxecutive Budget
Act, Article 1 of Chapter 143. 10 NCAC 47B .0404 - .0405
and 10 NCAC 49B .0102 do not affect the expenditures or
revenues of state or local government funds.
CHAPTER 39 - EMPLOYMENT PROGRAMS
SUBCHAPTER 39D - JOB OPPORTUNTTIES AND
BASIC SKILLS TRAINING (JOBS) PROGRAM
SECTION .0300 - JOBS PROGRAM COMPONENTS
AND ACTIVITIES
.0304 ALTERNATIVE WORK EXPERIENCE
(a) The Alternative Work Experience Program is unpaid
job training with clearly defined duties performed at a well-
supervised public or private non-profit agency or organiza-
tion. The agency or organization must serve a useful public
purpose. Participants will gain valuable work experience,
job skills, attitudes, and habits which will increase their
employability.
£b) All JOBS participants are eligible to participate in the
program.
(c) JOBS participants shall participate in the Alternative
Work Experience Program for ug to 30 hours per week and
shall have no limit on the number of months to participate.
(d) A wide variety of job training assignments shall be
used ranging from professional occupations to general labor.
45 CFR 250.63(lc) is hereby incorporated by reference
including all subsequent amendments and editions. Copies
of this Rule may be obtained by contacting the North
Carolina Division of Social Services. Employment Programs
Section. 325 North Salisbury Street. Raleigh, North Caro-
lina. 27603. 919/733-2873.
Authority G.S. 143B-153; 42 U.S.C. 682(a)(2).
CHAPTER 47 - STATE/COUNTY SPECIAL
ASSISTANCE
1483
NORTH CAROLINA REGISTER
November 1, 1995
10.15
PROPOSED RULES
SUBCHAPTER 47B - ELIGIBILITY
DETERMINATION
SECTION .0400 - ELIGIBILITY FACTORS
.0404 RESERVE
Eligibility Requirement.
(1) To dotormino oligibilit)', tho incomo maintonanco
oofloworkor shall count only rosourooa that are
ourrontly available to th e applioant or rooipi e nt.
For applioationB, only thooo rooouro e o that are
available during any month prior to disfKjsition ore
counted to dotormino oligibilit)' for those months.
A reoouroo ohall bo oonoider e d available not only
when it is actually availabl e but also wh e n th e
applicant or rocipiont baa a logal intoroot m a
rooouroo and can mako it available Eligibility
shall be determined using the reserve rules gov-
erning the federal Su pplemental Security Income
Program (SSP.
(2) Mental Incompetence.
(A) When a representative alleges that an applicant
or recipient is mentally incompetent (and the
allegation can be supported by a physician's
statement) and does not have a legal representa-
tive appointed to act in his behalf, the resources
held solely by the applicant or recipient or held
jointly shall be excluded in determining count-
able reserve provided the following two condi-
tions are met:
(i) the petition to have an applicant or recipient
declared incompetent is filed with the court
within 30 calendar days from the date the
applicant's or recipient's representative is
informed of the requirement; and
(ii) the petition to have a legal guardian appointed
is filed with the court within 30 calendar days
of the date the applicant's or recipient's repre-
sentative is informed of the requirement.
(B) The county department of social services shall
petition the court for incompetency and appoint-
ment of a guardian if:
(i) the applicant or recipient has no representative
willing to act in his behalf or the representa-
tive or guardian refuses to take the required
action. The county shall petition the court to
have the applicant or recipient declared incom-
petent and to have a guardian appointed within
30 calendar days from the date it learns of the
representative's refusal; or
(ii) the applicant's or recipient's representative
fails to take the required action within 30
calendar days of the date he was informed of
the requirement. The county shall within 15
calendar days from this date, [)etition the court
to have the applicant or recipient declared
incompetent and to have a legal guardian
appointed.
If the county department of social services is
required to act under Subparagraph (B)(i) or (ii),
the resources held solely by the applicant or
recipient or held jointly shall be excluded in
determining countable reserve.
(C) When the court rules that the applicant or recipi-
ent is competent, his resources shall be counted
beginning the first day of the month following
the month he is declared competent.
(D) When the court declares the applicant or recipi-
ent incompetent and appoints a guardian, the
guardian must take appropriate action to dispose
of or make exempt the resource within 30
calendar days of his appointment. If he does
not, the county department of social services
shall determine if the guardian is acting appro-
priately under the terms of the guardianship.
(E) If the guardian takes the appropriate action to
dispiose of or make exempt the resource, the
resource shall be excluded until the clerk of
court confirms the action taken by the guardian.
The resource, if otherwise includible, shall be
counted in reserve beginning the first day of the
month following the month the action is con-
firmed by the clerk of court.
^ Th e maximum rooop i 'o allowanc e for a opooiol
assistonoo applicant/rooipiont shall bo tho Bomo
amount aa tho Medicaid Aid to tho Agod, Blind,
and Disabl e d m e dically needy cov e rag e group.
Th e ooupl e amount shall apply regardleoo of
wbotbor each spouao qualifies for Special Asois
tanoo in his own right. — If tho reserve lovol
e xooodo th e amount ollov ^ 'od for th e number in
the budg e t unit, th e oaoo is inoligiblo.
{b) Individuals Whoso Roaorvo is Counted.
(1) UnlosB tho s pouse is in another aosiotanoo unit,
his r e s e rv e shall b e counted unl e ss th e oouplo is
s e parat e d or divoroed. — If th e spous e is in on
other assistanoo — unit, — only tho applicant or
recipient's share shall bo counted.
(3) Jointly Own e d R e souroos.
fA) — If a budget unit memb e r ov i Tio resourc e s jointly
with another public assi s tance rocipiont, his
share shall bo counted as an available re
souTo e . Tho rosouroo shall be divid e d e qually
unl e ss tho ov ^ 'noro have a signed agr ee ment
spocilying division.
(B) If a budget unit member owns rooourooa jointly
with a non assistance r e cipient, and ho can
dispose of tho rosouroo v ^ 'ithout tho consent of
the other ov i nor, his share shall bo counted as
on available resource.
(G) — If a budget unit memb e r ov ^ tis r e sourc e s jointly
with a non aooiotano e rocipiont, and h e cannot
dispose of tho resource without tho consent of
tho othor ov . Tior it shall bo determined whether
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1484
PROPOSED RULES
tho non aoaioUmoQ rooipiont oonoonto to tho
diopooal of the rooouroo.
(t) If ho oona e nto, th e budget unit m e mb e r's
s haro of tho reoourco shall bo oountod.
ftt) If ho rofusos, the budget unit member's
shar e Ghaii not b e count e d.
^ — Group I — rooep . ' e itoma count e d:
fH cash on hand;
(3)-
(4^
(5)-
(^
the curront balance of savings accounts;
that portion of a ohooking aooount oth e r than th e
monthly incom e d e posit e d to m e et th e family's
needs;
oaoh value of life insurance policies whon tho
total fac e valu e of all polioi e o that aooruo oaoh
valu e e xooedfl on e thouoond fiv e hundr e d dollars
($1,500);
equity — ft«t — valu e — less — encumbrances) — m
non e ss e ntial motor vehiol e o;
equity (tax value l e oo e noumbranooo) in e xo e oo of
one thousand dollars ($1.CKX)) in an essential
motor vehicle. — The vehicle mu s t bo noodod by
a family m e mb e r to:
— obtain med i cal tr e atm e nt.
^B)-
obtain or retain employment,
transport — handicapped — family — members — as
noodod, or
go shopping;
^f^^ — — atockfl, bonds, mutual fund shares, certificatoo of
deposit and other liquid assets;
promis s or)' not e o, i f salab le ;
{Wf
m^
r e vocabl e — trust — funds (revocable — means — the
budget unit member has access to tho trust);
net procoodfl from a business, including a fam ^
which has boon discontinued; and
equity (tax value less encumbrances) in real
property not used as a homo or producing an
(d) Group I — r e s e p i ' e it e m s e xclud e d:
f4^ persona l e ff e cts and hous e hold goods;
(3^ personal prof>erty including but not limited to:
{A) — a mobile homo u s ed as a. homosite;
fB) — a motorized mobil e hom e ;
(C) boats and trailers;
(-&) — campers; and
(E) — farm or business equipment;
(5^ equity (tax va l ue leoo encumbrances) — of one
thousand dollar s ($1,000) or l e ss in an e ssential
motor vehicle;
f4) income producing property; — Only that portion
of th e property which is us e d to produce on
income shall b e e xclud e d; — Th e prop e rty shall
continue to bo exc l uded whon it produces no
income because of factors beyond tho recipient's
control;
(5) t e rm l i f e insurance;
(6^ burial insurance and pro paid burial contracts;
f?^ th e cosh value of life insurance policies whon the
total face value of all polioioe that aooruo ooah
valu e do e s not exc ee d on e thousand fiv e hundr e d
dollar s ($1,500);
(^ relocation oasistanoo paymonto roooivod undof
Titlo XX of tho Uniform Relocation Asaistonco
and R e al Prop e rty' Acquisition Polioieo Act of
(9) that portion of tho monthly income deposited in
a chocking account to moot the family's needs;
(40) r e al prop e rty us e d as a hom e wh e n th e r e oipi
e nt's p e rsonal b e longings r e main in th e hom e
and he continues to state his intent to return or
his dopondonts live in tho home; — Limited to a
hous e plus contiguou s property with tax valu e of
tw e lv e thousand dollars ($12,000) or leoo;
(4+) life estate or remainder intoroots;
(43) heir pro[>erty; — Heir property i s a descendant' s
undivid e d int e root in real prop e rty owned in
common with other deooondanto; and
(4-3) value of burial plots.
(o) Group II — rooerve items counted:
(4) cash on hand;
(3) th e curr e nt balanc e of s avings accounts;
(3) that portion of a chocking account other than tho
monthly income deposited to moot tho family's
needs;
f4) cash value of lifo insuranc e polioi e o wh e n th e
total faoo value of all policies that accrue oaoh
value exceeds one thousand five hundred dollars
($1,500);
(5) tax valu e of non eoo e ntial — p e roonal property
limited to:
(A) — tax value in excess of ono thousand two hun
dred dollars ($1,200) in all motor vehicl e s
e xc e pt for Paragraph (0 of this Rul e ;
(B) — a mobile homo not used as a homesito;
(C) boats, boat trailers, and boat motors;
(©) — camp e rs;
(^ — farm or buoinooo equipment which is not us e d
to produce on income; and
(F) — motorized mobile homos;
(4) tax valu e of incom e producing personal pro[> e rty
wh e n e quit)' is in exoeoo of six thousand dollars
($6,000);
f?) tax valu e of income producing personal property'
which dooo not yi el d u n e t annual income of at
least six p e rc e nt of th e property's equity;
(8) tax value of income producing real property not
used as a homo when tho equity is in excess of
six thousand dollars ($6,000);
(9) tax valu e of incom e producing r e al prop e rty not
used as a homo which doos not yield a net
annual income of at least six percent of the
prop e rty's e quity;
(40) tax valu e of r e al prop e rty not us e d as a hom e
[limited to house and contiguous land with tax
value of twelve thousand dollars ($12,000) or
1485
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
(44^ Btooko, bondfl, mutual fiind ohor e o, o e rtifioateo of
d e posit and other liquid aoDotn;
promigooo' notoo, if solablo;
(43) rovooablo tniot fundo (rovooablo — moanB the
budg e t unit member haa aooooo to th e trust);
(i-4) valu e of pro paid revooablo burial oontraoto;
(45) not proooodo from a buslnoas, including a far ay
which baa boon discontinued;
lif e e state intoroot, if salabl e ;
r e maind e r int e r e st, if salabl e ; and
(44)-
(4^
(48) amount of rovorao mortgage remaining in t he
month following the month of roooipt.
(f) Group n — r e o e r^' e itomn oxolud e d:
(4) personal eff e cts and houoohold goods;
(3) mobile homo used as a homosito;
one essential motor vohiolo of any value which
m-
(A) — ep e oially e quipp e d for use by a handicapp e d
individmil; or
(B) — used to obtain medical treatment; of
(^ — us e d to obtain or retain e mploym e nt;
(4) tax value of on e thousand tv t 'o hundred dollaro
($1,200) or loss from the value of othe r motof
vehicles;
(Sh
(**^
incom e producing p e rsonal prop e rty' wh e n th e
equit)' does not exoeod six thousand dollaro
($6,000);
(6) income producing property' when the annual
yi e ld io at l e ast six poroont of th e e quity;
(7) real prop e rty uo e d as a home [limit e d to u hous e
and contiguous land with tax value of tv > 'olvo
thousand dollars ($12,000) or los s ]. The appli
oant or r e cipi e nt must hav e a writt e n stat e m e nt
from a physician indicating that h e is to r e turn
homo within six months from the date of entry
into the facility or hla spouse and/or dopondont
children remain in th e hom e ;
t e rm lif e insurance;
burial Insurance;
the cash value of life Influranoe policies whon the
total face valu e of all polici e s that aooruo cash
valu e do e s not exoeod on e thouflond fiv e hundr e d
dollars ($1,500);
relocation assistance payments reoeived under
Titl e XX of th e Uniform R e location Asoiotanoo
and Real Prop e rty Acquisition Polioi e o Act of
49Wt
(43) that portion of the monthly income that is dopos
ited in a ch e cking account to moot th e fami ly^
non solablo lifo ostato;
(44) non salable remainder Intoroot;
(45) h e ir property (heir prop e rty' is a desoendan t^
undivid e d int e r e st in r e al prop e rty own e d in
common with other dosoondants) ^-
valuo of burial plot s ;
(4?) irrovoottblo burial oontroct; and
(48) revoroo mortgagee in tho month of roooipt.
(g) V e rification. — Rooor^'o itomo must b e verifiod and
documented in the applicant or recipient's oaso record.
Statutory Authority G.S. 108A-41; 108A-46; 143B-153.
.0405 INCOME
(ft) Eligibility Requirement.
To dotof u iino eligibility' or
amount of paym e nt Incom e shall be count e d which Is
actually available to th e applicant or rooipiont and that which
tho client can legally make available for his support and
mttintonanoo. Eligibility shall be determined using the
Income rules governing the federal Su pplemental Security
Income Program (SSI).
(b) Con s ideration of Available Income.
(4) Financial Responsibility of a Spouse. — There is
spous e for spous e fmanoial responsibilit)' in the
Sp e cial Assistance program. — Th e r e for e , Income
that Is available to one spouse is available to the
other unices they ore separated or divorced.
Only — th e oontributions — from a — spous e — ef
ex spouso are counted if:
(A) — tho couple is divorced;
(^ — tho couple seporatod prior to one or both
e nt e ring a domiciliary car e facility; or
(G) — after e ntranc e of one or both to a domiciliary
care facility tho couple state that they do not
plan to maintain a home together if and whon
there is a r e turn to private living arrange
(2) Budget Unit Membership. — Tho budget unit
includes persons whoso needs and income ore
count e d In computing th e Sp e cial Assistance
payment. The unit may bo:
(A) — individual with no spouoo (only tho countable
income of tho applicant or recipient shall be
included))
(B) coupl e (th e countabl e incom e of tho applicant
or recipient and tho spouso shall bo included
unless the spouso roooivoa oosistanoo In his
own right. — In that cas e , the spouse's income
shall b e appli e d to his own n ee ds or prorat e d
if that i s more advantageous.)
(€) — Certain Disabled (CD) individual with essential
person (Tho countabl e incom e of th e applicant
or rooipiont and tho osoontiol person shall b e
considorod).
(3) Base Periods.
(44)-
(A) — Continuing Incom e . — Unless tho applicant's or
r e cipient's — inoom e has changed, — th e base
period for computing income (except for farm
income and inoome from self employment) is
th e second month prior to th e payment month.
Inoom e r e o e iv e d in th e inoome month shall b e
added and divided by the number of dates
paid. — Income shall bo convortod to a gross
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1486
PROPOSED RULES
m-
monthly amount.
Changing Inoom e .
(+^ Dofinition. — Change io defin e d ao on ao
quired oouroo of incom e , — a continuing
incroaoo or dooroaso in amount of inoon>o,
or torminalion of incom e .
(ii^ Treatment (s ea Paragraph (C) of this Rul e
lef — farm — income — asd — inoome — from
self employment):
^ Full prior months. — If inoom e ohangoo
during the booe p e riod. — th e inoom e
received — m — eaeh — month — shaH — be
counted to dotermino eligibility and
payment for thoo e montho. — Monthly
income ohall b e add e d, divided by th e
number of dates paid, and converted to
a monthly amount.
{II) DiepKasition month. — If inoom e ohang e a
during the month of diopoo i tion. th e
amount for the portion of the month
the applicant or recipient has received
inoom e shall b e add e d and conv e rt e d to
a monthly amount. — Inoom e shall b e
recomputed — when — the applicant — ef
recipient haa rcocivod the new monthly
amount.
(ffl) T e rminat e d inoom e . — T e rminat e d in
come shall not be count e d in a month
after it haa stopped. — For applications
only that inoome r e c e iv e d — shall b e
count e d if inoom e t e rminat e s prior to
the time of disposition. — For on going
casos. if income terminates prior to th e
tim e of disposition. — a suppl e m e ntal
ohook shall b e requ e st e d. — Inoom e shall
bo counted in the following month.
(€) — Fftfffl If
-ftftd Incom e From
Self Employment.
(+) Inoom e to b e disoontinu e d (all oosoo). — H
the farm operation or business is being
discontinued, the remaining portion of the
current year's total n e t inoom e shall b e
count e d as r e s e r i ' e .
{«3 Continuing income for applications.
^ Farm income. If the farm operation is
to continu e , th e pv e riod for computing
inoome is from the Sp e cial Aooistano e
payment effective date until the next
crop settlement. — The cash remaining
shall — be — divid e d — by — th« — number — ef
months in th e p e riod.
(H) Income from s elf employment. — If the
business is to continue. — monthly in
com e shall be calculated on the baoio of
inoom e r e ceived in th e 12 oal e ndor
months prior to the payment month or
the period in svhich the business has
boon in operation.
(4ii) ContLPuing inoom e for on going oaceo.
Th e bas e p e riod for r e oipionto is the 12
calendar — months — prior — te — tbe — review
month. — If the rooipiont had inoomo looa
than 12 cal e ndar montho. income for th e
numb e r of cal e ndar montho r e c e iv e d shall
bo counted.
(4j Dotormination of Countable Income.
(A) — all oountabl e e arn e d inoom e shall be added
together)
(B) — all countable unearned income shall bo added
together;
^G) — countable oamod inoom e shall bo add e d to
oountable unearn e d incom e ,
(c) Unearned Inoomo Counted:
ft) social security benefits (RSDI);
(S) SSI bon e fito;
(3) v e t e rans b e n e fits (VA);
f4) railroad retirement benefits;
(5) unemployment insurance (UI);
(6) Trad e R e adjustm e nt benefits;
f?) privat e dioabilit)' or un e mploym e nt bonofito;
(*) Workman's Compensation;
(9) pensions;
(10) oontributiono;
f44) divid e nds from otocko, bondo. other tnv e otmento,
and inoomo from trust funds;
Brown Lung bonofito;
H^
(+3) Black Lung b e n e fits;
(44) Housing and Urban D e volopmont (HUD) S e ction
8 payments paid directly to the applicant or
recipient; and
(44) inoom e from th e spouse of a domiciliary oor e
r e cipi e nt abov e th e SSI individual benefit or
above her reasonable needs,
(d) Unearned Income not Counted:
(4) rolooation payments;
(3) the curr e nt SSI individual b e n e fit l e v e l or r e a
sonablo needs of the spouse when she provides
convincing evidence that they oxccod the SSI
b e n e fit l e v e l;
(3) food given to the hous e hold;
(4) the value of the coupon allotment received under
the Food Stamp Program;
(S) the valu e of the U.S. D e fxirtm e nt of Agricultur e
donat e d foods (surplus oommod i ti e o);
i€j benefits received under Title VII, Nutrition
Program for the Elderly, of the O l der Americans
Aot of 1965, ao am e nd e d;
f?) sp e cial on e tim e paym e nts such as e n e rgy or
weatherization assistance;
(8) paymontfl made under the Alaska Native Claims
Settl e ment Act, Public Law 92 203;
(9) payments to c e rtain Indian tribes ao permitted by
Public Law 9 4 11 4 ;
(+0) shelter, util i ties, or household furnishings made
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PROPOSED RULES
availablo to an applicant or rocipiont at no cost;
(44^ food and clothing oontributiono made availabl e
to an applicant or rooipi e nt at no ooot;
fiS) that portion of educational loans, grants, or
scholarships including a paymont under the
Votorono Educational Aooiotano e Program (G.I.
Bill), actually uo e d for tuition, room, board,
books, fees, equipmont, special clothing needs,
required school insuronoo and child care oorvioo s
noo e oDory for school att e ndanc e ;
(4^ loans, grants, or soholarohipo to undorgraduat e o
from any program administered by the U.S.
Department of Education;
fl4) aociBtano e from oth e r ag e noi e e and organizations
(this inolud e e financial oooiotano e and in kin d
goods or sop i 'icos rocoivod from a governmental,
civic or charitable organization as long aa s uch
aid io for r e habilitation purpoo e o, sp e cial training
or e ducational opportunitioo and provid e d no
duplication exists);
fi5) incentive payments made to an applicant o r
r e cipi e nt participating in a vocational rehabilita
tion program as long as a training plan i B-4B
effect;
{44) weekly incentive allowance plus any reimburse
mont for transportation or child cor e oosto mad e
to trainooo under th e Compr e h e nsive Employ
mont and Training Act of 1977 (CETA);
(47) housing improvomonts grants to low income
famili e s approved by the North Carolina Com
mission of Indian Affairs or any funds distrib
uted poT capita to or held in trust for members
of any Indian tribe under P.L. 92 25 4 , P.L.
93 131, or P.L. 91 510;
(+8) Exp e rim e ntal — Housing — Allowanc e — Program
(EHi\P) paymenta made under Annual Contribu
tion s Contracts entered into prior to January 1,
1975, under Section 23 of th e U.S. Housing Act
of 1937, as amended;
fW) Title XX funds received to pay for services
rendered by another individuxxl or agency;
dioaot e r oooiotanoe;
(30>
(^4) HUD S e ction 8 paym e nts when paid to th e
provider or jointly to the applicant or recipient
and provider;
(33) any paym e nt receiv e d und e r Titl e II of th e
Uniform Relocation Aosiotono e and Real Prop
OTty Acquisition Policioo Act of 1970;
(3^) HUD Community Development Block Grant
funds r e ceived to fmano e th e renovation of a
privately own e d r e oidonoo;
(34) reverse mortgages.
(e) Earned Income Counted:
(4) wagoo from e mployment, tipo, o e aoonal employ
ment, babysitting, domestic e mployment, wages
from Adult Dd'clopmentol Activity Program
(ADAP) and from sheltered workshops where
employmont oontinuoG after completion of a
training program, CETA On the Job Train iflg
(OJT), CETA Work Exporieno«»> CETA Booio
Training Allowanoos which when added to
unemployment benefits oquxil minimum wa ges
for a 10 hour w ee k. Young Adult Cons e rvation
Corps und e r CETA (YACC), and paymonto
made directly to a renal dialysis patient's assis
tant who i e a rocipiont;
incom e from room e rs and boarders;
form income;
(4) income from self employment;
(5) income from rental property; and
(6) suppl e m e ntal paym e nts in e xoeoo of state maxi
mum rateo for AFDC FC and State Footer Home
fijnds paid by the count)' to recipients who serve
as foster parents.
(f) — Earn e d Income not Counted:
(1) unpredictabl e income;
(3) income from supportive services or reimburse
mont of out of pocket exponses to volunteer s
s e rving as fost e r grandparents, s e nior h e alth
aid e s, s e nior oomponions, Sor^'ioo Corps of
Retired Exooutivee (SCORE), and Active Corps
of Executives (ACE), and any other program s
und e r Tales I, II and HI of Public Law 93 113;
9h
AFDC FC and State Fo s t e r Hom e paym e nts
equal to or below the state maximum rates to
recipients who serve as foster parents;
(4) inoom e from th e Adult D e v e lopm e ntal Activities
Program (ADiVP) wh e n th e r e is a w'ritton train
ing plan in effect; and
(5) incentive paymonto from the Deportment — ef
Vocational R e habilitation (VR) wh e n th e r e is a
written training plan in effect.
(g) — Verification. — Income items must bo verified and
documented in the applicant's or recipient's case record.
(h) Computation of net e arn e d inoom e for on applicant or
rocipiont of Special Aooiotanc e (Lnoludoo spous e or e oo e ntiol
porson who receives or will receive CD but does not apply
to a spouse of a domiciliary care recipient):
(4) the first sixty five dollars ($65.00) ohall bo
disr e gard e d;
(3) impairment related work oxponsos for such items
aa equipment, prosthooofl, and modicol dovioos
and work r e lat e d e xp e ns e s for uniforms, tool s ,
materials or unusual transportation costs shall b e
subtracted; and
(3) then one half of the remainder shall be disro
gard e d.
Statutory Authority G.S. 108A-26; 108A-41; 143B-153.
CHAPTER 49 - AFDC
SUBCHAPTER 49B - ELIGIBILITY
DETERMBSfATION
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1488
PROPOSED RULES
SECTION .0100 - COVERAGE
.0102 OPTIONAL
(a^ — Child ago 1 8 . — Assistonco shall bo providod to an
othorv t 'iso oligiblo child who is ago 18 and not yot 19 and i s
a full timo otud e nt r e asonably e xp e ct e d to graduat e from a
program of o e oondary oohool (or th e e quival e nt l e v e l of
vocational or technical training) boforo roaching ago 19.
fb) Essential Adult. Assistance may be provided to an
adult who is essential to the well-being of a member of the
AFDC budget unit as described in 45 CFR 233.20(a)(2)(vii)
and this provision is horoby adopted by roferonco under
G.S. 150B 1 4 (c). which is hereby incorporated by reference
including all subsequent amendments and editions. Copies
of this regulation may be obtained from the North Carolina
Division of Social Services, 325 N. Salisbury St.. Raleigh,
North Carolina 27603. telephone number (919) 733-3055,
at a cost of five cents ($.05) per copy.
do so unless he complies with the following:
(1) A sign that informs consumers in large bold print
that a {K)licy or service fee of [amount] will be
charged, shall be displayed in a prominent place
so as to be seen and read from any part of the
office lobby.
(2) The consumer's consent in writing is obtained
with tho dato and amount l ihown on a separate
form each time a policy or service fee is charged.
The form shall be entitled. "Policy or Service Fee
Consent" and shall include the date and amount of
each fee charged.
(3) A dated receipt for the payment of a policy or
service fee shall be issued either separately from
the policy premium receipt or stated separately on
the receipt issued for the policy premium.
Statutory Authority G.S. 58-2-40; 58-2-195; 58-33-85 (b).
Authority G.S. 108A-25; 143B-153; 45 C.F.R. 233.10.
TITLE 11 - DEPARTMENT OF
INSURANCE
Notice is hereby given in accordance with G.S.
1508-21. 2 that the N.C. Department of Insurance
intends to amend rules cited as 11 NCAC 4 .0120 - .0124,
.0421 - .0422, .0429 - .0430.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conduaed at 10:00 a.m. on
November 28, 1995 at the Dobbs Building, 3rd Floor
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611.
Reason for Proposed Action:
11 NCAC 4 .0120 - .0124 - To make technical corrections.
11 NCAC 4 .0421 - .0422, .0429 - .0430 - Make clarifying
changes and remove ambiguous language.
Comment Procedures: Written comments and questions
should be directed to Tony Higgins, 430 N. Salisbury Street,
Raleigh, NC 27611, (919) 733-4935. Oral presentations
may be made at the public hearing.
Fiscal Note: These Rules do not affect the expenditures or
revenues of local government or state funds.
CHAPTER 4 - CONSUMER SERVICES DIVISION
SECTION .0100 - GENERAL PROVISIONS
.0120 POLICY OR SERVICE FEES
An agent, broker, or limited representative who deals
directly with consumers and who intends to charge a policy
or service fee in accordance with G.S. 58-33-85(b) shall not
.0121 PREMIUM PAYMENT RECEIPTS
All Promium premium payment receipts and copies other
than thooe ioouod dir e otly by on insur e r, shall be dated and
contain the printed or stampied name and address of the
agency or agent, broker, or limited representative, and the
name of the insurer. Receipts shall be signed by the person
accepting the payment.
Statutory Authority G.S. 58-2-40; 58-2-185; 58-2-195.
.0122 POWER-OF-ATTORNEY
Except for authorizations given in accordance with G.S.
58-45-35(a) or G.S. 58-46-15, no insurer, agent, broker, or
limited representative shall solicit or assume a
power-of-attomey from a consumer that authorizes the
agent, broker, or limited representative to sign insur-
ance-related forms.
Statutory Authority G.S. 58-2-40; 58-2-195.
.0123 USE OF SPECinC COMPANY NAME IN
RESPONSES
When an insurer makes a written response to an inquiry or
complaint made by a consumer or the Department, the
insurer shall identify on its response its mailing address.
addroflB and official corporate name and NAIC company
code , or its mailing address, addr e oo and specific corporate
nam e name, and NAIC company code if the insurer is part
of a group of companies.
Statutory Authority G.S. 58-2-40; 58-2-190; 58-3-50;
58-63-95.
.0124 INSURANCE COMPANY CONTACT
PERSONS
Every insurer shall provide the Department's Consumer
Services Division with the name, title, address, and tele-
phone number, including a toll-free number, of a designated
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November 1, 1995
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PROPOSED RULES
person to whom any person may send a complaint or
inquiry. Every insurer shall also provide the Division with
the company president's name, address, and telephone
number for the Division's use. Forms will be provided by
the Division, which shall be completed and returned to the
Division by every insurer. Every insurer shall compl e te
complete, have signed by the company president, and file
with the Division a new form within 15 business days after
any change in the information on the form.
Statutory Authority G.S. 58-2-40; 58-2-190; 58-63-65.
SECTION .0400 - PROPERTY AND LIABILITY
.0421 HANDLING OF LOSS AND CLAIM
PAYMENTS
The commissioner shall consider as prima facie violative
of G.S. 58-3-100 and 58-63-15(11) failure by an insurer to
adhere to the following procedures concerning loss and
claim payments when such failure is so frequent as to
indicate a general business practice:
(1) Loss and claim payments shall be mailed or
otherwise delivered within 10 business days after
the claim is settled.
(2) Unless the insured consents, no insurer shall
deduct from a loss or claim payment made under
one policy premiums owed by the insured on
another policy.
(3) No insurer shall withhold the entire amount of a
loss or claim payment because the insured owes
premium or other monies in an amount less than
the loss or claim payment.
(4) If a release or full payment of claim is executed
by a claimant, involving a repair to a motor
vehicle, it shall not bar the right of the claimant to
promptly assert a claim for property damages
unknown to either the claimant or to the insurance
carrier prior to the repair of the vehicle, which
damages were directly caused by the accident and
which damages could not be determined or known
until after the repair or attempted repair of the
motor vehicle. Claims asserted within 30 days
after repair shall be considered promptly asserted.
(5) If a release or full payment of claim is executed
by a third party claimant, involving a repair to a
motor vehicle, it shall not bar the right of the third
party claimant to promptly assert a claim for
diminished value, which diminished value was
directly caused by the accident and which dimin-
ished value could not be determined or known
until after the repair or attempted repair of the
motor vehicle. Claims asserted within 30 days
after repair for diminished value shall be consid-
ered promptly asserted.
(6) Exc e pt in total looo oituationo, th e insurer ohall bo
liable to the vohiclo owner and othora qa thoir
legal intoroBt may require, for the full cost of
repair s — lees — policy — doductiblos, — doprocia
tion/bottenn e nt and pre looo damag e or oonditionn
on th e v e hiol e i — In total looo oituationo, to the
extent of the insurer's payment, the inouror shall
protect any lionboldor's interest, ao rooordod with
th e Divioion of Motor V e hioloo, by placing the
li e nhold e r'o nam e on th e o e ttl e m e nt check or draft
ao CO payee.
Statutory Authority G.S. 58-2-40; 58-3-100; 58-63-15.
Mil CANCELLATION OF INSURANCE
The Commissioner shall consider an unfair trade practice
the cancellation by an insurer of any personal lines insur-
ance policy for which the premium has been paid because
there is another policy in force for which the premium has
not been paid. In the case of an open aooount the agent,
brok e r or producer who hoc e xtend e d credit may roquoot
oancollation of polici e o b e oauo e of nonpayment of pr e mium.
However, payments from the insured shall bo applied to
proper polioio e , — when distinguishable, — and only — those
polici e s for which th e pr e mium has not boon paid may b e
canc e ll e d for nonpaym e nt of premium.
Statutory Authority G.S. 58-2-40; 58-63-40.
.0429 COMMINGLING
The accounting records maintained by agents, brokers, and
limited representatives shall be separate and apart from any
other business records and demonstrate at all times that
collected funds due to insurers and return premiums due to
policyholders are available at all times.
Statutory Authority G.S. 58-2-40; 58-2-195.
.0430 PROOF OF MAILING; AUTOMOBILE
INSURANCE
As used in G.S. 20 310(0. 58-36-85. "c e rtificat e of
mailing" "proof of mailing" means a certificate issued by
and bearing the date stamp of the United States Postal
Service.
Statutory Authority G.S. 58-2-40; 58-36-85.
Notice is hereby given in accordance with G.S.
150B-21.2 that the N.C. Department of Insurance
intends to repeal rules cited as 11 NCAC 9 .0101 - .0104.
.0201 - .0203.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conducted at 10:00 a.m. on
November 28, 1995 at the Dobbs Building, 3rd Floor
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611.
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1490
PROPOSED RULES
Reason for Proposed Action: Rules no longer necessary.
Conunent Procedures: Written comments and questions
should be directed to Billy Creel, 430 N. Salisbury Street,
Raleigh, NC 27611, (919) 733-7434. Oral presentations
may be made at the public hearing.
Fiscal Note: These Rules do not affect the expenditures or
revenues of local government or state funds.
CHAPTER 9 - INVESTIGATIONS DIVISION
SECTION .0100 - GENERAL PROVISIONS
.0101 DEFINITIONS
(ft) — "InvootigationG division" or "the divioion" shall m e an
the invostigationfl division of the North Carolina Dopartmont
of Insurance.
(fe) — All oth e r terms shall be oo d e fined in th e G e n e ral
Statut e s of North Carolina.
Statutory Authority G.S. 58-9; 58-9.2.
.0102 PURPOSE OF DIVISION
The investigations division of the North Carolina Depart
mont of Insurance conduota invootigations for the dopartmont
und e r th e direction of th e Commission e r of Inourono e . — Tbi«
division is r e sponsibl e for inv e stigations to e nable the
commissioner to enforoo tho insuroneo laws of the State of
North Carolina. Tho division receives requests from
insuranc e oomponi e e. polic e d e partm e nts and other law
onforoomont agenci e s, tho United States Postal Sop i 'ioo and
tho Insurance Crime Prevention Institute for tho invoatiga
tion of fraudulent insuronoo claims occurring throughout the
Th e inv e stigations division also inv e stigat e s oomplainto
filed with the Department of Insurance against agents,
adjust e r s and brokers.
Each inv e stigator is a sworn law e nforc e m e nt offic e r.
Statutory Authority G.S. 58-9.2; 58-18.
.0103 DEPUTY COMMISSIONER
Th e r e shall b e a D e put)' CommioDionor of th e North
Carolina Department of Insurance in charge of tho in' i 'eatiga
tions division whose dutie s shall include, but are not limited
to th e sup e r » 'ision of all aotivitioo relating to achi e ving tho
purpose of th e division as stat e d in 11 NCAC 9 .0102.
Statutory Authority G.S. 58-7.3.
.0104 DIVISION PERSONNEL
Division personnel shall include an oasistont chief invosti
gator, investigators, secretaries, — clerks, and such other
p e rsonn e l ao may b e n e oeosar)' for th e proper execution of
th e r e sponsibiliti e s of th e division.
Statutory Authority G.S. 58-9; 58-9.2.
SECTION .0200 - INVESTIGATIONS
.0201 INVESTIGATION OF CRIMES:
AUTHORITY TO ARREST
This division has authority to conduct e xaminations vsA
invoetigations on behalf of tho Commiooionof of Lnouronoo
and when, in tho opinion of the oommiooioner or tho
inv e stigator or both, th e r e is suffici e nt e vid e nce to charge
any p e rson or p e rsons with a oriminol violation of the
insurance laws, tho commissioner or investigator may arrest
with warmnt or cause such person or persona to be arrested.
Statutory Authority G. S. 58-9. 2.
.0202 INVESTIGATION OF CRIMES:
PROCEDURES
(*^ — Typ e s of Inv e stigations. — Typ e s of investigations
include, but ore not limited to:
(4^ investigation into allegations of fmudulent activi
ti e s which may involve fraudul e nt claims ranging
from a few dollars to many thousands of dollars;
(3) investigation into allegations pertaining to e m-
b<»ea l e mont by agonto, brok e rs or other p e rsons.
(fe) — G e n e ral Proc e dur e s. Inv e stigations into alleged
criminal violation s require tho obtaining of filoo from.
among others, — inouran oo — companie s — and agents. The
inv e stigator is r e quir e d to have a working knowledge of,
among other things, accounting syst e ms and g e neral busi
nooo practioog of tho insurance industry.
The investigator cooperates with local, state and federal
law e nforc e m e nt agencies, and i s availabl e to testify in all
administrativ e and criminal proceedings.
(e) — Crimes Defined in Other Than Insurance Laws. — la
many instances, crimes which are tho subject of invostiga
tion by th i s division ar e not defin e d in Chapter 58 of tho
North Carolina G e n e ral Statut e s and th e inv e stigator must
make reference to tho criminal laws as set forth in Chapter
1 4 of the General Statute s as tho samo relate to the invosti
gation. — In addition, d e cisions of f e d e ral and stat e courts
may b e us e d during th e cours e of on inv e stigation.
Statutory Authority G.S. 58-9.2; 58-18.
.0203 NON-CRIMINAL INVESTIGATIONS
The — investigations — division conducts, — among other s ,
investigations at the discretion of the Commissioner of
Insuranc e , e ith e r on hio own motion or upon complain t
b e ing fil e d by a citiz e n of this state, into all e g e d violations
of provisions of the insurance laws, which said alleged
violation may not rise to the dignity of a criminal offense.
Such inv e stigation s may includ e , but ar e not limit e d to,
e xamination und e r oath of e x e cutiv e officers or agents of
insumnoo companies as may bo doomed noooGaory. — Findings
from such investigations are rof>orted to the oommissionof.
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NORTH CAROLINA REGISTER
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10:15
PROPOSED RULES
Tho diviaion aloo conducts invo s tigationa at the request of
th e oommiooionor or hio dooignat e d r e proo e ntativ e which
may includ e , but not b e limit e d to, th e procur e m e nt of
information to onttblo tho commis s ioner to enforce the
insurance laws in inatancoo V i 'hon the department is unable,
or it would b e improp e r to ooour e information by usual
methods, ouoh as by telephone or oorr e opondonc e .
Statutory Authority G. S. 58-9; 58-18.
Notice is hereby given in accordance with G.S.
150B-21.2 that the N.C. Department of Insurance
intends to amend rules cited as 11 NCAC 10 .0105, .1102,
.1603; repeal rule cited as 11 NCAC 10 . 1103; adopt rules
cited as 11 NCAC 10 .0605, .1110 - .1111.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conducted at 10:00 a.m. on
November 28, 1995 at the Dobbs Building, 3rd Floor
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611.
Reason for Proposed Action:
11 NCAC 10 .0105 - Reduces paperwork.
11 NCAC 10 .1102 - Necessary to comply with statute
changes.
11 NCAC 10 .1103 - Rewritten in a new rule.
11 NCAC 10 .0605, .1110 - Necessary to comply with
changes made in the statutes during the last session of the
General Assembly.
11 NCAC 10 .1111 - Necessary to comply with statute
changes made during last session of the General Assembly.
11 NCAC 10 .1603 - Technical and procedural changes.
Comment Procedures: Written comments and questions
should be directed to Charles Swindell, 430 N. Salisbury
Street, Raleigh, NC 27611, (919) 733-3368. Oral presenta-
tions may be made at the public hearing.
Fiscal Note: These Rules do not affect the expenditures or
revenues of local government or state funds.
CHAPTER 10 - PROPERTY AND CASUALTY
DIVISION
SECTION .0100 - GENERAL PROVISIONS
.0105 MANUSCRIPT OR INDIVIDUAL RISK
FILINGS
(a) Within 60 days after the inception date of a manu-
script or individual risk policy, the insurer must submit to
the Department of Insurance, Property and Casualty Divi-
sion:
(1) A full and complete copy of the |>olicy. Any
form or endorsement not previously filed with
the Department and approved for use must be
specifically identified.
(2) A statement describing how the rates were
calculated.
(3) A certification that the rates are not excessive,
inadequate, nor unfairly discriminatory.
(4) A statement explaining why a manuscript or
individual risk filing was needed.
(5) The appropriate filing fee.
(b) The Commissioner may require such other informa-
tion as he deems to be necessary for a review of filings
made under this Rule.
(c) All filings made under this Rule must be refiled
whenever a change occurs in or to the policy or upon the
renewal date of the policy, whichever occurs first. Continu-
ous jKilicies are not permitted.
(d) A copy of the a pproved filing shall be retained by the
filer in accordance with U NCAC 19 .0002 through \\
NCAC 19 .0005.
Statutory Authority G.S.
58-43-5.
58-2-40; 58-6-5; 58-41-50;
SECTION .0600 - CONSENT TO RATE
.0605 CONSENT TO RATE AUTO LUBILITY
COVERAGE
When consent to rate procedures are used to provide
motor vehicle liability coverage limits under G.S.
58-36-30(17). the application to effect consent to rate shall
also show the higher liability limits required by the excess
liability insurer.
Statutory Authority G.S. 58-2-40(1); 58-3&30(b).
SECTION .1100 - RATE FILINGS
.1102 APPLICABILITY
The followings Subparagraphs indicate which Rules of this
Section apply to a particular filing. Note that all rate filings
must be submitted separately and under independent cover
from form filings.
(1) Rule .1103 .1111 applies to all workers' compen-
sation insurance rate filings made by the North
Carolina Rate Bureau.
(2) Rule . 1 104 applies to all nonfleet private passen-
ger automobile insurance rate filings made by the
North Carolina Rate Bureau or the North Carolina
Reinsurance Facility.
(3) Rule . 1 105 applies to all rate filings made by the
North Carolina Rate Bureau other than those
involving workers' compensation insurance or
nonfleet private passenger automobile insurance.
(4) Rule . 1 106 applies to all filings for deviations
fixim the rates of the North Carolina Rate Bureau.
(5) Rule .1107 applies to all rate filings (including
those filings derived from filings of licensed rating
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1492
PROPOSED RULES
organizations), other than those involving:
(a) Lines of insurance under the jurisdiction of the (c)
North Carolina Rate Bureau.
(b) Nonfleet private passenger automobile insurance
rates for the North Carolina Reinsurance Facil-
ity, (d)
(6) Rule .1108 applies to all rate filings described in
Subparagraph (5) of this Rule that meet either or
both of the following criteria: (e)
(a) A filing for a coverage that involves an increase
in one year greater than ten percent or a de-
crease greater than 20 percent.
(b) A filing for a coverage by a company whose (f)
market share is greater than ten percent.
(7) In Subparagraph (6) coverage shall mean one of
the following:
(a) Accountants' professional liability; (11)
(b) Architects" and engineers' professional liability;
(c) Child care liability (other than such coverage (a)
sold incidental to another coverage, e.g., in
homeowners' or commercial multiperil policies);
(d) Dentists" professional liability; (b)
(e) Directors', officers', and trustees' liability;
(f) Errors and omissions liability; (12)
(g) Hospital premises liability;
(h) Hospital professional liability;
(i) Lawyers' professional liability;
(j) Liquor law liability; (a)
(k) Municipal liability;
(1) Nurses' professional liability; (b)
(m) Owners', landlords', and tenants' liability;
(n) Physicians' and surgeons' professional liability;
(o) Police professional liability; (c)
(p) Pollution and environmental impairment liability;
(q) Products and completed operations liability;
(r) Public official liability;
(s) Public school liability; (13)
(t) Recreational liability;
(u) Other health care specialities' professional
liability;
(v) If not one of Subparagraphs (6)(a) through (6)(u)
of this Rule, one of the lines listed on Page 14 (14)
of the Annual Statement.
(8) Rule . 1 109 applies to all licensed rating organiza-
tions participating in a filing made by the North
Carolina Rate Bureau or the North Carolina
Reinsurance Facility.
(9) Rate filings are not required for the following
lines of insurance:
(a) Aviation physical damage;
fb) Mortgage guaranty;
(c) Ocean marine.
(10) Rate filings are not required for the following (15)
types of policies:
(a) Those written pursuant to the Surplus Lines Act;
(b) Those written under the Fair Access to Insur-
ance Requirements (FAIR) Plan that include
coverages other than crime insurance;
Those written by the North Carolina Insurance
Underwriting Association (the Beach Plan) that
include coverages other than windstorm and hail
only or crime insurance;
Those written in North Carolina covering
multistate insureds except in respect to coverages
applicable to North Carolina locations;
Those written by a town or county farmers'
mutual fire insurance association restricting its
operations to not more than six adjacent counties
in this State;
Those that contain assessment provisions and
that are written by domestic insurance compa-
nies, associations, orders, or fraternal benefit
societies that are not reciprocals.
All inland marine manual rates and rating plans
must be filed.
This Subparagraph applies to the manual rates
and rating plans of both companies and rating
organizations.
Rates and rating plans that are not contained in
or derived from a manual need not be filed.
Rate filings are required for all rates whether
advisory, suggested, or manual, except for those
lines, policies, and rates specifically excluded in
Subparagraphs (9), (10), and (11) of this Rule.
Rates applicable to only one particular risk must
be filed.
Rates may be filed either as manual rates or as
ranges of rates from which the rates for individ-
ual Insureds are determined.
Rates based on loss cost filings must be filed in
accordance with all the requirements of Rules
.1107 and .1108 including the one that requires
a comparison of current and proposed rates.
Rules .1107 and .1108 also apply to loss cost
filings. In cases where a rating organization files
prospective loss costs, the same requirements as
for rate filings apply, with the exception of those
dealing with expense and profit provisions.
The rates contained in all filings approved prior to
January 1, 1990, other than those made by the
North Carolina Rate Bureau or the North Carolina
Reinsurance Facility, shall have an expiration date
of January 1, 1992. Such rates may, subject to
the Department's approval, be automatically
renewed by a letter to the Department, specifying
the Department's file number and the original
approval date. Thereafter, they remain in effect
until superseded, withdrawn, or modified by a
subsequent filing.
Loss costs, rates, or multipliers for workers'
compensation and employers' liability that are
based upon prospective loss costs filings of the
North Carolina Rate Bureau shall be submitted in
accordance with Rule . 1 1 10 of this Section.
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NORTH CAROLINA REGISTER
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PROPOSED RULES
Statutory Authority G.S. 58-2-40; 58-36-15; 58-36-30;
58-36-100; 58-40-30; 58-40-40; 58-41-50; 58-45-35;
58-46-15.
.1103 WORKERS' COMPENSATION
The informntion r e quir e d by N.C.G.S. 5 8 36 15(h) ohall
bo proGont e d ao foUowo:
Note! If data required by thio Rule ore not ourr e ntly b e ing
coUootod or roportod, or arc not currontly readily available
to insurers, influroro shall commonco proopoctivoly ooUecting
or reporting ouoh data b e ginning Januaiy 1, 1992. If c e rtain
data are not r e gularly ooU e oted through th e Btatistioal plan,
a opocial oall for ouoh data to companioa whoso aggregate
workers' — componaation — written — premium — ie — at — l«ast
throe fourtho of th e North Carolina pr e mium may b e
substitut e d. Thoroafter, — ouoh r e quir e d data that hav e
accrued shall bo included in each filing until enough data are
available to fully satisfy this Rule. If in addition to the full
yoaro of data sp e oifiod in thio Rul e , more r e oent data of looo
than a full y e ar are availabl e , — such data ohall also b e
provided. — If updates to the information spocifiod in this
Rule booomo available before tho olooo of ovidenoo relating
to the filing, th e y shall also be provided.
(4^ North Carolina e arned premiumo at th e actual and
current rate level ; — losses and loss adjustment
oxf>on908, each on paid and incurred bases without
trending or other modification for th e e xp e ri e no e
period, including tho looo ratio anticipat e d at th e
time the rates were promulgated for the oKporience
period!
(a) Includ e promiutB ; — looo, — and looo adjuotm e nt
^
(e) If any identifiable group of polioioo io oxoludod
from th e calculation of claaoification difforon
tialo, — d e oorib e — thoo e polioieo, — indicate thoir
market shore, and provide an explanation for
their exoluoion.
(d) Cl e arly deooribe all adjuotmonts to pr e miums,
looooo, looo adjuotment e xpenooo, e xp e no e o, and
exposures included in the filing. — Show tho
unadjusted amounts to which adju s tments wore
^ made, identify' tho opooific adjuotm e nto, provide
d e tails on th e d e rivation and application of th e
adjustment factor s , and de s cribe all intermedi ate-
oaloulationo. — Whore identical adjustnfHMito are
appli e d to a set of similar data, an e xample of
one of th e s e adjuotm e nto io ouffioiont.
(p) Include actual earned premiums and calculate
earned premiums at present rates. — iMoo indicate
how ouoh oaloulationo w e r e produc e d, supply
supporting docum e ntation for a oampl e of ouoh
calculations, and justify any aggregate factors
i() Eotimate th e amount of pr e mium coll e cted from
e xpense constants. — Provide this premium in
dollars, as a peroontago of tho standiird earned
premium, and as a peroontage of net earned
pr e mium ; — If th e p e rc e ntage of pr e mium ool
looted in thio mann e r io e xf>eoted to chang e ,
e s timate the extent of tho change and provide tho
details of this calculation.
(g) Eotimat e th e amount of additional pr e miu m
coll e cted b e oauoo of tho minimum pr e mium rul e .
inoiuo e premium ; — looo, — ana looo aojuotm e nt coii e otoa o e oauoo or mo mmunum pr e mium rul e .
e xp e no e data from all compani e s writing North Provide this pr e mium in dollars, as a percentage
Carolina workers' oomDenaation insurance. — Ia of standard earned premium, and na a ooroontngo
Carolina workers' compensation insurance. — la
addition, if exposures are used in the calculation
of pr e miumo at prooont ratoo, provid e all avail
abl e e xposure data from theoo oompanieo. — If th e
oxpori e noo of any company that writes more
than one percent of tho North Carolina worker s '
oompenoation writt e n pr e mium has boon e x
elud e d from any rat e l e v e l) tr e nd, looo d e v e lop
mont, or investment income calculations, idon
tify tho company and its market share and
provide an e xplanation for ito exclusion. — Also
e otimat e th e aggregat e mark e t s har e of oth e r
oomponios whoso oxperionce is excluded from
such calculation s .
Includ e e xpans e data from all oompani e o writing
North Carolina work e rs' oompenoation insur
ance. If the oxperienoo of any of the 50 largest
(based on written premium) countr)'wide writer s
of work e rs' oomp e noation insuranc e is e xclud e d
from any e xji e no e l e v e l calculation, id e ntify th e
company and its market share and provide an
explanation for its exclusion. — Also estimat e th e
aggr e gat e — market share — of other oompani e o
whos e e xp e rienoo io e xcluded from such oaloula
tion s .
of standard oomod premium, and as a porcontage
of n e t e arned premium. — If th e p e rc e ntag e of
premium ooU e oted in thio mann e r io e xp e ct e d to
change, ostimato tho extent of tho change and
provide tho details of thio calculation.
(b) Provid e th e lat e st available written and e arn e d
premiums and mark e t ohor e o for tho ten lorg e ot
writers of North Carolina workers' oomponsa
tion insurance.
(i^ Provid e oompooite looo and premium information
from e ach of th e latoot two Annual Stat e m e nts
for which aggregate data are available for the 50
largest writers of North Carolina workers'
oomp e noation inouronoo, including th e following:
(i) — Underv i 'riting and Inv e otm e nt Exhibit, Part 2,
Lino 16;
(«) — Underwriting and Investment Exhibit, Part 3,
Lin e 16;
(iii) — North Carolina Pag e H, Lin e 16.
(j) Provide to tho extent possible tho following
information on companies deviating from the
work e rs' oomp e noation rat e s of th e North Caro
Una Rate Bureau for e ach of tho latoot fiv e
available calendar years:
(i) — A li s t of all deviating companies;
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1494
PROPOSED RULES
(ii) — The ootimntod totxU otoncktrd promium written
at doviatod ratoo;
(iii^ — Tho e stimat e d p e ro e ntag e of tho e ntir e otat e
wide standard premium writton at doviatod
rates;
(iv^ — h e total amount of d e viations in doUaro;
fv^ — Th e av e rage poroontago deviation for d e viating
companioo;
fv4) — Tho avomgo poroontago deviation for all com
panioo.
fit) Provid e to th e e xtont poosiblo tho following
information on companie s issuing dividends on
North Carolina workers' oomponootion polioioo
for each of th e latoot five cal e ndar years:
(i) — A Hot of all oompanios issuing divid e nds:
(ii) — Tho estimated total promium of oompanio s
issuing dividends:
(iii) — Tho estimated p e rc e ntag e of th e e ntir e otat e
wid e premium of companioo ioouing divid e nds;
{Wj — Tho total amount of dividends in dollars;
fv) — TTie average percentage dividend issued by
compani e s issuing dividondo;
fvi) — Tho av e rag e p> e ro e ntago divid e nd issu e d by all
companies.
(1) Prosido the following information on losses and
loss adjustment exp e ns e s:
(i^ — For e ach of th e lat e st thr ee availabl e aooid e nt
and calendar years, undovolofKtd and untrondod
losses and loss adjustment expenses;
(ii^ — For e ach rat e l e v e l implem e nt e d in th e lat e st
throo oalondor years, th e e xpootod loco ratios
that woro anticipated in tho implemented rates;
(i«) — For each accident and policy year included in
th e filing, pwid loooes, oos e basis rooop i 'oo, looo
d e v e lopm e nt, incurr e d allocat e d loss adjust
mont expenses (if collected separately from
losses), — incurred — unallocated — (or combined
allocat e d — asd — unallocat e d) — looo adjustm e nt
e xp e ns e s, appli e d tr e nd factors, and tr e nd e d
incurred losses and loss adjustment expenses.
(3) Credibility factor devolopmont and application.
Provide all information r e lat e d to th e d e rivation of
all cr e dibility — factors contain e d — in th e filing,
including tho following:
(a) A description of all data reviewed — and all
V i 'orkohooto uood;
(b) A complet e d e scription of tho m e thodology us e d
to derive these factors;
fe) A description of alternative methodologies used
or considorod for us e in tho last thr ee y e ars;
(4) A dcGoription of th e crit e ria us e d to s e l e ct a
methodology;
fe) Sp>ecific — details on the application — of these
crit e ria in th e sel e ction of a m e thodology' for this
filing:
ff) EVjtails on the application of tho methodology to
this filing.
(3) Logo dovolopmont faotof dovolopnaont and applioa
tion on both paid and incurr e d boo e s and in both
numb e rs and dollars of claims:
(^ Provide all information related to tho derivation
of all loss development factors contained in tho
filing, including th e following:
(i) A dosoription of all data revi e w e d and all
worksheets used;
(ii^ — A complete description of tho methodology
us e d to derive th e s e faotoro;
(iii) — A dosoription of alternativ e m e thodologie s
uood or considorod for use in the last throo
yoars;
(iv) A d e scription of th e criteria uo e d to soloot a
methodology;
(v) — Spxxiific details on tho application of thooo
criteria in the selection of a methodolog)' fof
this filing;
(vi) Details on the application of th e m e thodology
to this filing.
(b) Provide at least tho latest fivo available yoors of
the aggr e gat e looo data dooorib e d in Subpara
graphs (3)(T3)(i) through (iii) of this Rule for
matching companies for all pairs of ouooeooivo
evaluation datoa. — i\loo ppovido tho ooiroopond
i«g — looo dovolopment — factors — asd — five year
av e rag e factors derivabl e from those data.
(i) — Data on both a policy yeaf and an aooident
year basis;
(ii) — Data separat e d into ind e mnity and modiool
portions, ao well ao oombined data;
(«♦) — Data separated into paid, case incurred, and
incurred but not reported portions, as well as
oombin e d data;
(e) Proi i 'ld e for e ach of th e Iocs amounts in Subpara
graph (3)(b) of this Rule, the corresfKjnding
earned premiums, paid claim counts, incurred
claim counts, and outstanding claim counts.
(d) Provid e at least th e lat e st t e n availabl e policy
years of the incurred loss data described in
Subpamgmphs (3)(d)(i) through (ii) of thi s Rul e
from th e Unit Statistical — Plan for matchin g
polioi e o for all pairs of ouoo e eoiv e e valuation
dates. — iMso provide tho corresponding loss
development — factors — aad — five year — average
factoro derivable from the data.
(i) — Loss e s separat e d into ind e mnit)' and m e dical
portions, as well as combined data;
(it) — IjOsqoq separated into deaths, permanent totals,
major permanent partials, minor p e rman e nt
partials, tempomr>' totals, and nonoomponoabl e
medioolo.
fe) Provide for each of tho loss amounts in Subpara
graph (3)(d) of this Rul e the corr e sponding
incurr e d claim counts and for oaoh of tho policy
yoars in Subparagraph (3)(d) of this Rule tho
aggregate earned exposures and standard earned
1495
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
I
I
I
promium. — Whoro smnll claims ore roportod in
bulk, pro' i 'ido ouoh information as aoouratoly ao
fKJOoiblo, givon th e improoioion inherent in auoh
aggrogato data r
(I) Provide for each of the policy porioda in Sub
parogmphfl (3)(b) and (3)(d) of thio Rul e the law
am e ndment factors for adjusting pact loooeo to
current bonofit lovola.
(g) Include a description of the roaaons for tho
differ e nces botsvoon th e policy year data pro -
vided in respons e to Subparagraphs (3)(b) and
(3)(c) of this Rule and those provided in ro
spKanso to Subparagraphs (3)(d) and (3)(e) of this
(h) Provide th e information in Subparagraphs (3)(b)
and (3)(o) of this Rule for each of tho 15 largest
writers of North Carolina workoro' oomponaa
tion ineurano e .
f4^ Trending factor dev e lopm e nt and application:
(a) Provide all information folatod to tho derivation
of all trend factors contatnod in the filing inolud
ing th e following:
(i) — A description of all data reviewed and all
worksheets used;
(ii) — A complete description of the methodology
used to derive th e s e factors;
(iii) — A description of alt e rnativ e m e thodologies
used or considered for use in the last throe
years;
(i¥) — A d e scription of th e crit e ria us e d to s e l e ct a
m e thodology;
(v) Specific details on tho application of thoao
criteria in tho selection of a mothodolog)' for
this filing;
(vi^ — Details on tho application of the methodology
to this filing.
^ Calculate tho following trend factors:
(i) — Ind e mnity' and m e dical tr e nd factors booed on
th e lat e st fiv e availabl e policy y e ars of North
Carolina paid and incurred data;
(ii) — Indomnit)' and modiool trend factors boood on
th e latest fiv e availabl e aooid e nt y e ars of North
Carolina paid and incurr e d dntn;
(iii) — Indemnity' and modioal trend factors based on
tho latest fivo available policy years of coun
tr)fwide paid and incurr e d data;
(iv) — Ind e mnity' tr e nd factors for individual stat e s
based on policy year data and thoir reconcilia
tions with tho countrywide factor;
(v) — M e dical tr e nd factors for individual stat e s and
for groups of f ee sch e dul e and non fee ached
ulo states baaod on incurred policy year data
and thoir reconciliation with tho countrywide
factor;
Th e — factors
(^
-in — Subparagraphs — ('1)(b)(iii),
( 4 )(b)(iv), and (4)(b)(v) of thi s Rule based on
accident year data, if available.
(5) Changes in promium base and exposures.
(^ For th e intervals listed in thio Subparagraph,
provide th e numb e r of North Carolina V i 'orkoro'
compensation policieo and their aggregate pre
mium for tho latest available five policy years.
Provide this information soparotoly for stock and
nonstock — oompani e s — and — for all — oompanioo
combined! $1 $99, $100 $10Q, $200 $209,
$300 $ 4 99, $500 — $999, $1,000 — $2,999,
$3.000 — $1,999, $5,000 — $9,999, $10,000
$21,999, $25,000 $19,999, $50,000 $99,999,
$100,000 $2 4 9,999, $250,000 $199,999, and
over $ 4 99,999.
(b) Deocribo any oountrywid e diotributions of num
b e r of policieo or premium by lay e r that are
used in the filing. — Also provide details of how
auoh diotributions have boon used in tho rato
filing and a d e scription of any adjustm e nts that
hav e been mad e to th e m.
(e) Provide tho following eatimato s of tho average
promium discount for each of tho latest fivo
available policy y e ars:
(i) — That using tho North Carolina distribution of
policie s contained in Subparagraph (5)(a) of
this Rule;
That using a oountr>r\ » 'ido distribution of r
(«f
poli
im) — That using the North Carolina distribution of
policies contained in Subparagraph (5)(a) of
this Rul e adjust e d for its e xclusion of tho
portions of interstate polioioo not locat e d in
North Carolina. — In oetimating thio adjustment
factor calculate and toko into the account tho
aggr e gat e intrastate portions of thos e policieo
making up th e oountr^'wide distribution in
Subparagraph (5)(c)(ii) of this Rule.
(d) Provide or estimate the following information -en
e xposur e tr e nds:
(i) — Th e stat e wid e av e rag e w ee kly wag e for tho
latest fivo available calendiir year s ;
(ii) Tho statewide ave r age weekly wage fo r the
lat e st ten availabl e policy years without th e
application of a payroll limitat i on;
(»«) — The statewide average wookly wage for tho
latest ton available policy years aftor tho appli
cation of a payroll limitation;
(iv) — The estimated stat e wid e av e rag e weekly wage
for the calendar and policy yoars during which
the ratca will bo in effect.
(6^ Limiting — factor d e velopment — aad — application.
Provid e information on th e following it e mo:
{a) Limitations on losses included in the statistical
data used in the filing.
(b) Limitations on th e e xtent of th e rat e l e v e l
chang e .
(e) Limitation s on tho extent of cloosification rate
changes.
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NORTH CAROLINA REGISTER
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1496
PROPOSED RULES
(d) Any othor limitationa appliod.
(?) O r 'orhoad oxponoo do' i 'olopmont and tho applioation
of oommioBion and brok e rage, other aoquioition
oxponsofl. general oxfwnaoo, toxoe. lioonaoe, and
(a) Provid e all information r e lat e d to th e d e rivation
of all e xponoe provicions contain e d in th e filing
including tho following!
fi) — A description of all data reviewed and all
workohooto uo e d;
fit) — A oomplote doooription of the mothodologj i '
used to derive these factors;
(ii^ — A de s cription of alternativ e — mothodologioo
UGod or oonoid e r e d for uoo in th e laot throo
y e ars;
(iv) — A description of tho criteria uood to soloct a
methodology;
(¥) — Speoifio details on tho applioation of thoGO
criteria in th e solootion of a m e thodology for
this filing;
(vi) — Details on tho application of th e methodology
to this filing.
(b) Provide a oomparioon of tho propos e d e xp e ns e
provi s ions with those composite provision s for
the 50 largest writers of North Carolina work
»fs^ — oomponoation — inourono e — included in the
latest availabl e Insuranc e Exp e ns e Exhibit, with
those same composite provisions included in the
proliminar^' data undorlying the next such Ex
hibit (if available), and with thos e provisions in
tho latest availabl e Call for 19xx Calendar Y e ar
Data by State for North Carolina.
(e) For each of tho ton largest writer s of North
Carolina — workers' — comp e nsation — insuranoo,
provid e a otatomont — regarding any aotivitioa
affecting expense or sorvioo levels undertaken in
the last thro e years.
(S) Tho poroont rat e chang e :
(ft) Provide th e ov e rall stat e wid e rat e change, as
well OS the amount of the change attributable to
each of the following: — loss experience, a modi
fioation of th e tr e nd factor, a change in expense
provisions, law am e ndm e nts, a chang e in th e tax
provision, a change in tho assessment provision,
and any other factors.
(b) Provide the rote changes for e ach industry' group
and for each olossifioation.
(e) If the rate changes ovcntunliy implemented differ
from those provided in the filing, submit a
Bupplemont to th e filing that d e ooribos tho impl e
m e nt e d changes and th e modifications mad e to
the filing to produce them. — This supplement
shall bo submittod as soon as poooiblo aftor a
d e cision is r e ach e d to impl e m e nt rates oth e r than
thos e that w e r e originally fil e d and in any oaoo
no later than tho first implementation date of tho
rates.
(9) Final prof>osed rates:
(a) Provid e th e propos e d rateo for each olaooifioa
(fe) If tho rates eventually implomontod differ from
tbooo provided in tho filing, submit a oupplomont
to the filing that d e oorib e o th e impl e m e nted ratoo
for e aoh olacoi fioation. — This supplement oholl b e
submitted oa soon as posoiblo aftof a dooioion i a
roaobod to implement rates other than those that
w e r e originally filed and in any oooe no later
than th e first implementation dat e of the ratoo.
(4©) Investment earning s^ — consisting of invostmont
irtoome and realized plus unroalizod capital gains,
from looD, loDo e xp e ns e , and unoamod premium
rooon i 'oo:
(a) Calculate — tho amount of investment ineomo
earned on loss, — loss oxponoo and unoamod
premium r e s e rv e s from North Carolina workers'
oomp e nmtion policies (ao a ratio to both not and
standard camod premium) foF each of the latoot
five available calendar years and estimate that
incom e for th e curr e nt y e ar and for all yooro
during v i 'hich the proposed rates are oxp e oted to
bo in effect. — Provide tho dotxiils of all caloula
tions, including tho amount of tho oompoaito
rooorvoo of each typo at tho bogiiming and e nd
of e ach of th e lat e st fiv e availabl e calendar
yearo. i\lso describe and justify' all aosumptions
used in such calculations.
(b) Provid e information on th e e stimat e d av e rag e
length of timo that olapseo botwoon tho ooour
ronco of a componoablo aocidont in North Caro
Una and the pfl)'mont of a claim on that accident.
Tho averag e s hall b e a w e ight e d av e rag e boo e d
on size of oloim paym e nts. — Eotimate how th e
length hofl changed over tho latest ton available
calendar years.
fe) Provide composit e aoo e t, liabilit)', and incom e
information from e ach of th e lat e st two Annual
Statements for which aggregate data ore avail
able for tho 50 large s t writers of North Carolina
workers' compensation insuranc e , including th e
following (in th e som e format and d e tail as th e
exhibits in individual company statements) !
(i) — Pago 2 (Assets);
(ii) — Pag e 3 (Liabilities, Surplus and Othor Funds);
(iii) — Pag e A (Und e P iii 'riting and Inv e otm e nt Exhib it)?
fi¥) — Inauronco Exponso Exhibit Port H, Column 16.
(44) Identification of applicable statistical plans and
programs and a c e rtification of oompliano e with
th e m:
(ft) Identify' all statistical plans used or consulted in
preparing this filing and doscribo tho data oom
piled by each plan.
(b) Provid e a oorti fioation that there is no e videnc e
known to the Bureau or to tho statistical agonoioa
involved that the data that were collected in
1497
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
i
fteeef dxmoo with such atntiotical plans and wore
uood in tho rate Filing ar e not truo and aoourate
roprooontationo of e ach oompany'o exp e ri e no e to
tho boat of that company's knowlodgo.
(e) Provide gonoral — doscription s — of tho oditing
proooduroo uo e d to v e rify' that tho data wore
ooU e oted in aooordiino e with th e statiotioal piano,
and conoiso sununario e of tho adjustmonts and
corroctions mado to tho oonoolidatod ratomaking
^i3) Inv e otm e nt oamingo on oapitnl and surplus: — Giv e n
tho soloctod underwriting profit and oontingoncio a
provision containod in tho filing, indicate tho
r e sulting rat e s of return (including oonoideration of
inv e etm e nt income) on equity capital, on statutory
s urplus, and on total aaooto. — Show tho derivation
of all factors used in producing those calculations
and jufltily' the fairn e ss and reaoonabloneoo of thes e
rat e s of r e turn.
I
I
(4^ Level of capital/surplu s noodod to support pro
tnium writings without endangering the solvency
of m e mb e r oompanioo:
{«) Provid e aggregate pr e mium to surplus ratio s for
the latest ton available calendar year s for those
companies writing North Carolina workers'
compensation insuranc e during that entir e p e
(^ Provide estimates of the comparable ratios for
all companies writing North Carolina workers'
comp e nsation insurance for all years during
which th e proposed rates are expooted to be in
effect,
(o) Provide information on the amount of surplus
needed to support tho writing of North Carolina
workers' compensation insuranc e , taking into
account the ri s kineoo of the line. — Dosoribo tho
assumptions used — in the derivation — of that
amount.
(4) Provid e all information r e lating to any e xplicit
Of implicit allocation of surplus by state and by
lino undortokon in tho filing, including tho
following:
(i) A doDoription of all data reviewed and all
workshoots usod;
(«) — A complete description of the methodology
used to produc e this allocation;
(iii) — A d e Goription of alt e rnativ e m e thodologi e s
used or con s idered for use in the lost throe
year s ;
(iv) — A d e scription of the criteria uo e d to s e lect a
m e thodology;
(v) — Specific details on the application of those
criteria in the selection of a methodology for
this filing;
(vi) — E) e tailo on th e application of th e methodology
to this filing.
(14) Such other information that may be required by
any rule adopted by tho Commissioner!
(a) Provide information on tho following oop e oto of
work e rs' comp e nsat i on individual risk rating
plana, including an explanat i on of their purpose
and a detailed description of thoir derivation:
(i) — Ex{> e ot e d loos rat e ;
(ii) — D Ratio;
(«i) — Excess loss factors;
(4v) — Exceaa loss adjustment amounts;
(v) — Table of weighting and ballast values.
(b) Provid e oil information r e lating to th e profit and
oontingoncios provision containod in tho filing,
including tho following:
(i) — A d e scription of all data r e vi e w e d and all
workohooto used;
^ — A complete doocription of tho methodology'
U9od to deriv e this provi s ion;
(iii) — A d e scription of alt e rnativ e m e thodologies
used or oonoidorod for use in th e loot throe
years;
(iv) — A description of tho criteria usod to s elect a
methodology;
(v) — Sp e cific d e tails on tho application of th e s e
criteria in the selection of a methodology for
this filing;
(vi) — D e tails on th e application of th e m e thodology
to this filing.
(e) Include copie s of all agendas and minutes -ef
meetings of tho North Carolina Rate Bureau
aff e cting th e filing, ao well ao a list of all att e n
does at th e s e m ee tings, thoir titles, and th e ir
affiliations.
(d) Describe all payments made to all conQult^ults
(including lawy e rs, actuari e s, and e conomis ts)
r e lated to this filing and th e pr e vious on e on
worker s ' oomponoation insurance. — If payments
cannot bo specifically identified as related to
particular filings, e otimato them.
(e) Id e ntify and d e scrib e all changes in mothodolo
giofl from the previous North Carolina worker s '
compensation rate filing. — If any colloctod or
reported data r e quir e d by this Rule ar e provid e d
within 30 days aft e r th e initial submittal of a
filing, that data shall bo mado a part of tho
filing, provided tho initial submittal aolcnowl
e dges that it is incompl e te and identifies opooifi
oally what furth e r data or e to be submitt e d
within tho time pormitted ; — No filing otherv ^ 'ioo
comploto shall bo doomed to be proper until such
tim e that all data r e quir e d by this Rul e hav e
b ee n submitt e d.
Statutory Authority G.S. 58-2-40; 58-36-1 5(h).
.1110 WORKERS COMPENSATION LOSS COSTS
QUESTIONNAIRE
For those filings made in accordance with 11 NCAC 10
10:15
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November 1, 1995
1498
PROPOSED RULES
■ 1 102(15). supporting information shall be presented as
follows:
Reference Filing Adoption Form:
Insurer's name.
Contact person for filing.
Title of contact person.
Phone number.
m
(el
m
(g)
on
(i)
tii
ill
iM
(ol
Ol
lal
Insurer's FEIN.
Insurer's file number.
Department file number.
NCRB reference filing number-
Effective date.
Insurer's proposed effective date (if different
from NCRB effective date).
Insurer's approximate market share of North
Carolina written premium.
Whether the multiplier is a pplicable to this filing
only or to subsequent reference filings.
Statement of accuracy of information.
Signature of company official.
Date signed.
Summary of Su pporting Data Form:
Does this filing a pply uniformly to alf workers'
compensation classes.
Lx)ss costs modification:
(ill
(c)
ih
(iii)
liYl
(yi)
(vii)
Without modification (factor equals 1.000).
With modification (su pporting documentation
required).
Loss costs modification factor.
Selected expenses (attach Expense Provision
Exhibit):
Commission and brokerage.
Other acquisition.
General expenses.
Taxes, licenses, fees, loss based assessments.
Profit, contingencies, credit for investment
£el
ih
m
ill
Ikl
Other.
Total (i + ii + iii + iy + v + vi).
Development of Expected Loss and Loss Adjust-
ment Expense (Target Cost) Ratio: Expressed in
decimal form: 1.000-(d)(vii).
Overall effect of expense constant and minimum
premiums: Expressed in decimal form, i.e.,
1.2% overall effect would be 0.988.
Overall effect of size-of-risk discounts plus
expense gradation recognition in retrospective
rating: Expressed in decimal form, i.e.. 8.6%
average discount would be 0.914.
Provision for premium taxes, licenses, fees, and
loss based assessments: See NCRB Reference
Filing, Exhibit II.
Company formula loss costs multiplier: (l))(ii)
X (1.000 -h)/ Kg) - (d)(yii)1 x (f).
Company selected loss costs multiplier: Explain
any differences between (i) and (j).
Rate level changes for the coverages to which
m
(ml
(ni
(ol
(al
(ci
(dl
(el
this page applies.
Are you amending the minimum premium
formula.
Are you amending the expense constant(s).
Are you changing the premium discount sched-
ules.
If the answer to Qi^ (m). or {n) is yes, documen-
tation is required.
Expense Provisions Exhibit: For the following
items, provide the three most recent years, the
average, industry average, and the selected:
Commissions and brokerage-
Other acquisition.
General expenses.
Taxes, licenses, fees, and loss based assess-
ments.
Profit, contingencies, and investment income:
£]} Profit and contingencies,
(ii) Credit for investment income.
£fl Other.
£gl Total (a + b + c-l-d + e-)-f).
Indicate if the insurer's actual expense ratios are North
Carolina, countrywide, or other (explain); and if the
insurer's actual expense ratios are a percent of standard
premium, percent of net premium, or other (explain). If the
selected provisions differ from the average for reasons other
than rounding, please explain.
Statutory Authority G.S. 58-2-40; 58-36-15; 58-36-100.
.1111 WORKERS' COMPENSATION
The following information is required pursuant to G.S.
58-36-15(h) for those filings made under G.S. 58-36-100:
(1) North Carolina losses and loss adjustment ex-
penses, each on paid and incurred bases without
trending or other modification for the experience
period.
(a) The filer shall include loss and loss adjustment
expense data from all companies writing North
Carolina workers' compensation insurance. In
addition, if exposures are tised in the calculation
of premiums at present rates, the filer shall
provide all available exposure data from these
companies. If the experience of any company
that writes more than one percent of the North
Carolina workers' compensation written pre-
mium has been excluded from any trend or loss
development calculations, the filer shall identify
the company and its market share and provide an
explanation for its exclusion. The filer shall
also estimate the aggregate market share of other
companies whose experience is excluded from
such calculations.
(b) If any identifiable group of policies is excluded
from the calculation of classification differen-
tials, the filer shall describe those policies,
indicate their market share, and provide an
1499
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
explanation for their exclusion.
(c) The filer shall clearly describe all adjustments to
losses, loss adjustment expenses, expenses as
defined in G.S. 58-36-100(c). and exposures
included in the filing.
(d) The filer shall provide the latest available written
and earned premiums and market shares for the
10 largest writers of North Carolina workers'
compensation insurance.
(e) The filer shall provide the following information
on losses and loss adjustment expenses:
£i} For each of the latest three available accident
and calendar years, undeveloped and untrended
losses and loss adjustment expenses;
£ii} For each accident and policy year included in (c)
the filing, paid losses, case basis reserves, loss
development, incurred allocated loss adjust-
ment expenses £if collected separately from
losses), incurred unallocated (or combined (d)
allocated and unallocated) loss adjustment
expenses, a pplied trend factors, and trended
incurred losses and loss adjustment expenses.
(2) Credibility factor development and application.
The filer shall provide all information related to
the derivation of all credibility factors contained in
the filing, including the following:
A description of all data reviewed:
A complete description of the methodology used
to derive these factors:
A description of alternative methodologies used
in the last three years:
A description of the criteria used to select a
methodology: (e)
Specific details on the application of these
criteria in the selection of a methodology for this
filing:
Details on the a pplication of the methodology to
this filing.
(3) Loss development factor development and applica-
tion on both paid and incurred bases and in both
numbers and dollars of claims:
(a) The filer shall provide all information related to (f)
the derivation of all loss development factors
contained in the filing, including the following:
A description of all data reviewed;
A complete description of the methodology (g)
used to derive these factors;
A description of alternative methodologies
used in the last three years;
A description of the criteria used to select a
methodology:
Specific details on the application of these (4)
criteria in the selection of a methodology for (a)
this filing:
Details on the application of the methodology
to this filing.
Co) The filer shall provide at least the latest five
(a)
m
m
fiii)
(vi}
available years of the aggregate loss data de-
scribed in Sub-items (3)(b)(i) through (iii) of this
Rule for matching companies for all pairs of
successive evaluation dates. The filer shall also
provide the corresponding loss development
factors and five-year average factors derivable
from the data:
(ii Data on both a policy year and an accident
year basis:
(ii) Data separated into indemnity and medical
portions, as well as combined data:
(iii) Data separated into paid, case incurred and
incurred but not rep>orted portions, as well as
combined data;
The filer shall provide for each of the loss
amounts in Sub-item (3)(b) of this Rule, paid
claim counts, incurred claim counts, and out-
standing claim counts.
The filer shall provide at least the latest 10
available policy years of the incurred loss data
described in Sub-items (3)(d)(i) through (ii) of
this Rule from the Unit Statistical Plan for
matching policies for all pairs of successive
evaluation dates. The filer shall also provide the
corresponding loss development factors and
five-year average factors derivable from the
data:
(i) Losses separated into indemnity and medical
portions, as well as combined data;
(ii) Losses separated into deaths, permanent totals.
major permanent partials, minor permanent
partials, temporary totals, and medicals only.
The filer shall provide for each of the loss
amounts in Sub-item (3)(d) of this Rule the
corresponding incurred claim counts and for
each of the policy years in Sub-item (3)(d) of
this Rule the aggregate earned exposures.
Where small claims are reported in bulk, the
filer shall provide such information as accurately
as possible, given the imprecision inherent in
such aggregate data.
The filer shall provide for each of the policy
periods in Sub-items (3)(b) and (3)(d) of this
Rule the law amendment factors for adjusting
past losses to current benefit levels.
The filer shall include a description of the
reasons for the differences between the policy
year data provided in response to Sub-items
(3)(b) and (3)(c) of this Rule and those provided
in response to Sub-items (3)(d) and (3 )(e) of this
Rule.
Trending factor development and a pplication:
The filer shall provide all information related to
the derivation of all trend factors contained in
the filing including the following:
(i) A description of all data reviewed;
(ii) A complete description of the methodology
10:15
NORTH CAROLINA REGISTER
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1500
PROPOSED RULES
used to derive these factors;
(iii) A description of alternative methodologies
used in the ]ast three years;
(iv) A description of the criteria used to select a
methodology:
(v) Specific details on the a pplication of these
criteria in the selection of a methodology for
this filing;
(vi) Details on the application of the methodology
to this filing.
fb) TTie filer shall calculate the following trend
factors:
(i) Indemnity and medical trend factors based on
the latest eight available policy years and
accident years of North Carolina paid and paid
plus case data;
(ii) Indemnity and medical trend factors based on
the latest eight available accident years and
policy years of multi-state paid and paid plus
case data;
(5) Changes in premium base and exposures. The
filer shall provide or estimate the following infor-
mation on exposure trends:
(a) The statewide average weekly wage for the latest
five available calendar years:
(b) The statewide average weekly wage for the latest
10 available policy years without the application
of a payroll limitation:
(c} The statewide average weekly wage for the latest
\0 available policy years after the application of
payroll limitation; and
(d) The estimated statewide average weekly wage
for the calendar and policy years during which
the rates will be in effect.
(6) Limiting factor development and application. The
filer shall provide information on the following
items:
(a) Limitations on losses included in the statistical
data used in the filing;
(b) Limitations on the extent of the rate or loss costs
level change;
£ci Limitations on the extent of classification rate or
loss costs changes; and
(d) Any other limitations applied.
(7) The percent rate or loss costs change:
(a) The filer shall provide the overall statewide rate
or loss costs change, as well as the amount of
the change attributable to each of the following:
loss experience, a modification of the trend
factor, law amendments, a change in the loss
based assessment provision, and any other
factors.
(b) The filer shall provide the rate or loss costs
changes for each industry group and for each
classification.
(8) For assigned risks rate filings, the filer shall
include support for reasonable margin for under-
writing profit and contingencies and investment
income, including realized capital gains.
(9) For assigned risk rate filings, the filer shall
provide investment earnings on capital and sur-
plus. Given the selected underwriting profit and
contingencies provision contained in the filing, the
filer shall indicate the resulting rates of return
(including consideration of investment income) on
equity capital, on statutory surplus, and on total
assets. The filer shall show the derivation of all
factors used in producing these calculations and
justify the fairness and reasonableness of these
rates of return.
(10) As required by G.S. 58-36-15, the filer shall:
(a) FYovide information on the following aspects of
workers' compensation individual risk rating
plans, including an explanation of their purpose
and a detailed description of their derivation:
(i) For experience rating plans, the table of ex-
pected loss rate and discount ratios and table
of weighting and ballast values.
(ii) For retrospective rating plans, table of insur-
ance charges, multipliers (including the deriva-
tion of any assigned risk subsidy), and table of
excess loss factors.
(b) Describe all payments made to all consultants
(including lawyers, actuaries, and economists)
related to this filing and the previous one on
workers' compensation insurance. If payments
cannot be specifically identified as related to
particular filings, the filer shall estimate them.
(c) Identify and describe all changes in methodolo-
gies from the previous North Carolina workers'
compensation rate filing. If any collected or
reported data required by this Rule are provided
within 30 days after the initial submittal of a
filing, that data shall be made a part of the
filing, provided the initial submittal acknowl-
edges that it is uncomplete and identifies specifi-
cally what further data are to be submitted
within the time permitted. No filing otherwise
complete shall be deemed to be proper until such
time that all data required by this Rule have
been submitted.
Statutory Authority G.S. 58-2-40; 58-36-15(h).
SECTION .1600 - PROSPECTIVE LOSS COSTS
FILINGS
.1603 RATE AND LOSS COSTS
(a) A rating organization may develop and file a reference
filing with the Department, which filing shall contain the
advisory prospective loss costs, the underlying loss data,
and other supporting statistical and actuarial information for
any calculations or assumptions underlying those loss costs.
(b) After a reference filing has been made with the
1501
NORTH CAROLINA REGISTER
November I, 1995
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PROPOSED RULES
Department and determined by the Commissioner to be
proper, the rating organization will provide its participating
insurers with a copy of the reference filing.
(c) A rating organization may print and distribute manuals
of prospective loss costs, as well as supplementary rating
information as described in U. NCAC 10 .1604. After an
initial prospective loss costs reference filing has been made
by a rating organization and has been determined by the
Commissioner to be proper, that rating organization shall no
longer dev e lop or file any minimum premiums in this State.
(d) Each insurer must individually determine the final
rates it will file and the effective date of any rate changes
through an independent company decision-making process.
Suoh ratoD ohall b e produc e d by adding exp e ns e and profit
loading and any looo oost modifioation to th e proof> e otiv e
loss costs dovolopod by tho rating organizat i on.
(e) If an insurer that is a member, subscriber, or service
purchaser of a rating organization decides to use the
prospective loss costs in a proper reference filing in support
of its own filing, the insurer must submit a proper rate filing
in accordance with 11 NCAC 10 .1107. In that filing, the
insurer shall provide justification for the loss cost multipliers
used in producing the final rates. The insurer's rates are the
combination of the prospective loss costs and the insurer's
loss cost multipliers.
(f) If an insurer files a modification of the prospective
loss costs in a proper reference filing based on its own
anticipated experience, an indopondont filing ia required.
Supporting su pporting documentation shall be required, fef
any upward or downward modifioationo of th e proopootive
looo oooto in th e r e f e r e nce filing.
(g) An insurer may vary expense loads by individual
classification, grouping or subline of insurance. An insurer
may use variable or fixed expense loadings or a combination
of these to establish its expense loadings.
(h) If an insurer wishes to use a minimum premium of
any ty{)e, a proper rate filing must be submitted to the
Department.
(i) An insurer may file such other information that it
deems to be relevant and shall provide such other informa-
tion that is requested by the Department.
(j) Wh e n e v e r a n e w roforono e filing is filed and d e t e r
min e d to b e prop e r: An insurer may request to have its loss
costs multiplier remain on file with the Department and
reference all subsequent prospective loss costs reference
filings. Upon receipt of subsequent rating organization
reference filings, the insurer's rates shall be the combination
of the prosf>ective loss costs and the loss cost multiplier on
file with the Department, and will be effective on or after
the effective date of the prospective loss costs. The insurer
need not file anything further with the Department.
(+) If an insurer docidoa to uao tho prospoctivo losa
costs to revise its ratoo, tho insurer must file
with th e Department a rate filing qu e otionnoir e
aooording to 11 NCAC 10 .1107, including the
offcctivo date of th e ratoo and copies of all now
rate pagoo.
(2) If on insuror dooidoe not to uoo tho fovioiona, the
Inourer is not r e quired to make any filing with
th e Departm e nti
(k) If an insurer that has filed to have its loss costs
multiplier remain on file with the Department intends to
delay, modify, or not adopt a particular rating organization's
reference filing, the insurer must make a filing with the
Department before the effective date of the reference filing.
(1) To the extent that an insurer's final rates are deter-
mined solely by applying its loss costs multiplier to the
prospective loss costs contained in a rating organization's
reference filing and printed in the rating organization's
manual, the insurer need not develop or file its final rate
pages with the Department.
(m) If an Insurer has filed to have its loss cost multiplier
remain on file, applicable to subsequent reference filings,
and a new proper reference filing is filed:
(1) If the insurer decides to use the prospective loss
costs and effective date as filed, the insured does
not file anything with the Department. The
insurer's rates are the combination of the pro-
spective loss costs and the on-file loss cost
multiplier. The new rates become effective on
the effective date of the loss costs.
(2) If the insurer decides to use the prospective loss
costs as filed, but with a different effective date,
the insurer must notify the Department of its
effective date before the effective date of the
loss costs.
(3) If the insurer decides to use the prospective loss
costs, but wishes to change its loss cost multi-
plier, the insurer must make another filing in
accordance with Paragraphs (d) through (f) of
this Rule before the effective date of the loss
costs.
(41 If the insurer decides not to revise its rates using
the prospective loss costs, the insurer must
notify the Department before the effective date
of the loss costs,
(n) If the insurer has not elected to have its loss cost
multiplier remain on file, applicable to the future prospec-
tive loss cost reference filings, and a new proper reference
filing is filed:
(1) If the insurer decides to use the prospective loss
costs to revise its rates, the insurer must file
with the Department a rate filing in accordance
with Paragraphs (d) through £0 of this Rule,
including the effective date of the rates.
£2} If an insurer decides not to use the revisions, the
Insurer is not required to make any filing with
the Department.
Statutory Authority G.S. 58-2-40; 58-36-15; 58-37-35;
58-40-30; 58-41-50; 58-45-45; 58-46-55.
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1502
PROPOSED RULES
Notice Ls hereby given in accordance with G.S.
150B-21.2 that the N.C. Department of Insurance
intends to amend rule(s) cited as 11 NCAC IIB .0111,
.0114, .0141, .0146. .0303; IIC .0112, .0132; 14.0202,
.0603 .0705; adopt 11 NCAC IIB .0306; IIC .0313, IIC
.0504 - .0505; 14 .0432; repeal 11 NCAC IIB .0140,
.0142, .0148, .0302, .0304 - .0305; IIC .0113, .0118; IID
.0108 - .0109, .0302 - .0305; 14 .0430 - .0431.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conduaed at 10:00 a.m. on
November 28, 1995 at the Dobbs Building, 3rd Floor
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611.
Reason for Proposed Action:
11 NCAC IIB .0111, .0114, .0141, .0146, .0303, .0306;
lie .0112, .0132; IIC .0313, .0504 - .0505; 14 .0202,
.0432, .0603, .0705 - Necessary to comply with changes
made in the statutes during the last session of the General
Assembly.
11 NCACllB .0140, .0142, .0148, .0302, .0304 - .0305;
lie .0113, .0118; IID .0108 - .0109, .0302 - .0305; 14
.0430 - .0431 - Rules no longer necessary.
Comment Procedures: Written comments and questions
should be directed to Ray Martinez, 430 N. Salisbury Street,
Raleigh, NC 27611, (919) 733-5633. Oral presentations
may be made at the public hearing.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government funds.
CHAPTER 11 - FES[ANCIAL EVALUATION
DIVISION
SUBCHAPTER IIB - SPECIAL PROGRAMS
SECTION .0100 - SECURITIES
.0111 CONVERSION TO CASH MASTER
TRUST
(a) As used in this Rule and elsewhere in this Section:
(1) "PTC" means the electronic transfer of munici-
pal securities through the Deposit Trust Corpo-
ration.
(2) "Federal Book Entry" means the electronic
transfer of U.S. Treasury obligations and cash
through member banks of the Federal Reserve
System.
£b] The Department of Insuranc e will shall process and
release securities that have matured only upon receipt of a
written request from the company and where adequate
replacement has been made by the company, mado. Bonds
or notoo e ligible for Book Entr>', DTC or CD will oonvort
to oaoh on the day of maturity. Securities eligible for
Federal Book Entry or DTC shall be converted to cash at
maturity. Certificates of deposit shall be redeemed or rolled
over at maturity. Book Entry io oonoluoivoly prooutaod to
m e an th e e l e otronio tranof e r of Unitod Statoo Troaour)'
obligations and coah through mombor bonk s and tho Fodoral
RoQoi" . 'o oyotom. — DTC is oonoluoivoly pfooumod to moon
Dopooitory Truot Corporation N.Y. e leotronio tranof e r of
s e ouriti e s primarily munioipals.
Statutory Authority G.S. 58-2-40; 58-5-1; 58-5-75.
.0114 DEPOSITS HELD IN TRUST BY
COMMISSIONER OF INSURANCE
The establishment and servicing of deposits shall be done
by authority of the Commissioner of Insurance only. The
deposits shall be in the custody of the Stat e Treasur e r-
Master Trust Bank. The procedure for replacement of the
deposit shall be as follows:
(1) The company desiring to replace bonds or notes
shall make a written request for replacement to the
Commissioner of Insurance. This request shall be
made in advance of the shipment of any securities.
(2) The replacement dejxjsit shall be of an equal value
to the bond or note being replaced.
(3) The Commissioner may shall require additional
securities at the time of replacement when ho fools
tbat if the citizens and policyholders of this state
»ay will have less protection as a result of the
replacement.
Stamory Authority G.S. 58-2-40; 58-5-1; 58-5-40; 58-5-90;
58-5-95.
.0140 USE OF MASTER TRUST ALL
EXISTING COMPANIES TRANSFERRED
Inouranoo — oomponi e o — having — ooouritioo on dopooit at
Novombor 27. 19 8 5 aro advisod that all such socuritios will
bo tranflforrod from tho vault at tho Stato Trooauror'a Offioo
to a North Carolina Bonk ao provid e d under tho tormo of an
agr ee m e nt b e tw ee n th e Departm e nt of Inourono e and tho
succoasful bidder bonk on REP .0005 4 dated August 15,
Statutory Authority G.S. 58-7.5; 58-9.
.0141 USE OF MASTER TRUST TO INCREASE
DEPOSrr
All insurance companies that are required by law to
increase the market value of the securities on deposit in
North Carolina as a result of Rules 11 NCAC IIB .0106
through 11 NCAC IIB .0107 muot mak e ito inoroooo dopooit
in oompliono e with tho Mast e r Truot Agr ee m e nt e nt e red
between tho Commiosioner of Inouronco, State of North
Carolina and tho ouocossful bidder bank on REP .00054
dat e d August 15, 19 8 5 on ouoooooor bank, shall effect the
increases in compliance with the Master Trust Agreement.
Tlie Master Trust Agreement is the contract between the
Department and the Master Trust Bank under G.S. 58-5-1;
1503
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
variable annuit)' oontraota in North Corolintt.
(b^ — In this oonn e otion, th e Commiooionor will oonsidor
among oth e r thingo:
^4^ tho hiotor)' and fmanoial condition of the com
pafiyt
(2) th e ohoraot e r, reoponoibility and g e n e ral fitnooo
of th e offio e re and dir e otore of the company; and
(3^ the law and rogulationo under which tho com
pany is authorized in tho atato of domicile to
ioou e variabl e onnuit)' contracts.
is on file in the Financial Compliance Division of the
Department; and is available for inspection or copying in
accordance with G.S. 58-6-5.
Statutory Authority G.S. 58-2-40; 58-5-1; 58-5-25; 58-5-40;
58-5-95.
.0142 CONVERSION FROM STATE
TREASURER TO MASTER TRUST BANK
In order to faoilitato th e tranofer of se ouritioo from th e
Offioo of State Troaouror to the ouoo e osful bidder bank, all
socuritioo v ^ 'oro moved by tho bidder bank where eligible for Statutory Authority G.S. 58-79.2.
Federal Book Entr)' all oocuritioo were placed in Federal
Book Entiy. Wh e re e ligibl e for DTC Systems all o e ouriti e a
wore placed in DTC. — All other o e ouriti e s were transf e rr e d
in phyoical form to the auccoosful bidder bank, aa its
appointed Fiduciar)'.
Statutory Authority G.S. 58-7.5; 58-9.
.0146 MASTER TRUST BANK ABILITY
TO REGISTER SECURITIES
From time to time registration of securities aay shall be
changed by the Master Trust Bank to facilitate redemption
sell or transfer of accuritioa such the redemption, sale, or
transfer of securities on deposit. Such changes wiii shall be
made after a written request for approval has been made by
the Master Trust Bank and received and acknowledged
a pproved by the Commissioner of Insurance.
Statutory Authority G.S. 58-2-40; 58-5-1; 58-5-30; 58-5-63;
58-5-70; 58-5-90; 58-5-95.
.0148 MASTER TRUST CONVERSION TO
CASH
Ml doposita will bo oonvortod to oaoh on thoir maturity'.
It shall bo tho roaponaibility of tho insurance company to
mok e arrang e m e nts in aooordano e with applicabl e Rul e 1 1
NCAC IIB .0151 to p e rf e ct timely r e l e as e and r e plac e m e nt.
Statutory Authority G.S. 58-7.5; 58-9.
SECTION .0300 - VARIABLE CONTRACTS
.0302 QUALIFICATION TO ISSUE
VARIABLE ANNUITIES
(«) — No company shall d e liv e r or issu e for d e liv e ry
variable contracts within this state unless:
fi) It is liconsod or organized to do a life inauranco
or annuity business in this stat e ;
Th e Commiooionor io oatiofiod that its financial
m-
condition and its methods of operation in con
noction with tho issuance of such contracts will
not rend e r its operation hazardous to th e public
or its policyhold e r s in this state; and
(3) TTie Commissioner has am e nd e d tho liconso of
auoh — company — te — fofloct — authority — to write
.0303 INFORMATION REQUIRED PRIOR
TO APPROVAL
Any licensed life insurance company desiring permission
to amend its license to include the authority to write variable
annuities contracts shall submit to the Commissioner for
review the following items:
(1) copies of all laws and regulations imder which the
company is authorized in its state of domicile to
issue variable annuities; contracts;
(2) a description of the method of operations of the
company in its state of domicile as regarding
variable annuitios r contracts, the description to
include, method or methods of marketing the
variable annuiti e s contracts and the number of
years the company has issued such contracts;
(3) a description of the company's proposed method
of o{>eration in the State of North Carolina; The
description shall include method or methods of
marketing the variable annuities, contracts, the
types of contracts to be issued and the criteria
followed by the company in the selection of agents
to sell the variable annuity' contracts;
(4) oop i og of all p>ortinont dooumonts, s uch aa oorpo
fate — resolutions, — eter-; — whoroby — one Of more
s e parat e accounts have boon ootablish e d by th e
company — for tho purpose of ioouing variable
annuities; copies of aH pertinent documents,
including:
(a) corporate resolutions that indicate that one or
more separate accounts have been established
and funded by the company for the purpose of
issuing variable contracts;
(b) prospectus or offering memorandum filed with
the Securities and Exchange Commission dis-
closing the information contained in H. NCAC
IIB .0306;
(5) certified copies of the separate accounts annual
statements as filed with domiciliary state for the
three years prior to the request for such authority
in the State of North Carolina;
(6) a statement from the company indicating the other
states in which the company has applied for
permission to write variable aimuity products
contracts and further indicating if the state has
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1504
PROPOSED RULES
approved or disapproved such application — (+f
dioapprovod, otate rottDon). the a pplication: and if
disapproved, the reason or reasons for disap-
proval.
Tho CommiBBionor may don>' pormJBBion to any oompany
failing to oubmit tho information in thio Rul e ; how e v e r,
oompanioo who oannot comply with Itom (5) of thio Rul e
will bo conoidorod on a oaBO by oaoo boBia if all other
information io aatiofactor)'.
Statutory Authority G.S. 58-2-40; 58-7-95.
.0304 FOREIGN COMPANIES: VARUBLE
ANNUITY LAWS
If tho law or ruloo of tho otat e of domicil e of a for e ign
company provides a dogroo of protection to tho policyhold
ora and tho public which io oubatontially equal to that
provid e d by thooo rul e o, tho CommiGoionor, to th e e xt e nt
doom e d appropriate by him in hio discr e tion, may oonoid e r
eomplianoo with such law or ruloo aa oomplianoo with thooo
Statutory Authority G.S. 58-2-40; 58-7-95.
.0305 SEPARATE ACCOUNTS OF DOMESTIC
LIFE INSURANCE COMPANY
(a) — A domootio lif e insurance oompany issuing variabl e
annuity contracts shall oatablish one or moro separate
accounts purauont to G.S. 5 8 7 95, and shall allooato to auoh
account or aooounto amounts roooivod or retain e d in oonn e o
tion with variable oontraoto, — subj e ct to th e following
proviaions!
(^ Tho amounts allocated to any separate account
and aooumulations th e r e on e qual to the reoon'e
liability' of th e s e parate account shall bo inveotod
in accordance v ^ 'ith the investment laws of this
State, however:
{A^ — i\ny amounts in e xcooo of guoh rooop i 'o liability'
may bo invootod and reinv e st e d without r e gard
to any requirements or limitations proscribed
by such investment laws, provided;
fB) — That ouch res e rv e liabilit)' has boon inv e sted ao
heroin r e quired and ohall — inoludo b e nefits
guaranteed as to amount and duration and
funds guaranteed as to principal amount or
stat e d rat e of int e r e st .
Th e inv e otm e nt in ouch separate account or aooounto shall
not be token into account in applying the investment limita
tions applicable to other investments of tho company.
(S) With r e sp e ct to 75 p e rc e nt of tho market value
of th e total aoooto in a s e parat e account, no
company s hall purchase or other i viso acquire the
securitioa of any isauor, other than oocuritioo
issu e d or guarantood ao to principal or inter e st
by th e Unit e d Stat e s, if imm e diat e ly aft e r such
purchase or acquisition tho market " . 'aluo of auoh
investment, together with prior investments of
such separate ocoount in such security token at
mark e t, would oxoood 10 p e roont of th e marke t
value of tho aoo e to of said oopamt e aooount;
provided, however, that tho Commissioner may
waive such limitation if, in hio opinion, ouoh
waiv e r will not render tho operations of ouch
s e pwrat e aooount hazardous to th e public or tho
polioyholdoro in thio otate.
(S) No separate account shall invest in tho voting
ooouritioo of a singl e issu e r in an amount in
0X0000 of 10 p e rcent of tho total issued and
outstanding voting securitie s — of such issuer
provided that tho foregoing shall not apply with
r e sp e ct to s e curiti e s hold in s e parate aooounto,
th e voting rights in which aro oxoroisablo only in
accordance — with — instructions — from — persons
having interests in s uch accounts.
{4) Th e limitations provided in Subpwiragraphs (a)(2)
and (a)(3) of thio Rul e shall not apply to tho
investment with respect to a separate account in
tho securities of an investment oompany regi s
torod under th e Inv e stm e nt Company Aot of
IQilO, provided that th e invootmonto of ouoh
investment company comply in Bubotanco with
Subparagraph s (2) and (3) of thio Paragraph.
(fe) — Unl e ss oth e p i vis e approved by tho Commiooionoi r
ass e ts allocated to a s e parate account shall bo valu e d at their
market value on tho date of valuation, or if there is no
readily available market, then as provided under tho torma
of th e contract or the rul e s or oth e r written agroomont
applicabl e to s uch s e parat e aooount; provided, that unless
othoiv i 'i s o a[>provod by tho Commisaionor that portion of tho
assets of s uch separate account equal to the company' s
rocerve liabilit)^ with r e gard to th e guaranteed b e n e fits and
funds roforrod to in Parts (A) and (B) of Subparagraph (a)
(1) of this Rule, if any, shall bo dotorminod in accordance
with actuarial procedures that recognize tho variable nature
of tho benefits provid e d and any mortality guarantooo.
If and to th e e xt e nt so provid e d und e r th e applicable
contracts, that portion of the anseto of any such separate
account equal to tho rosor^'os and other contract liabilities
with r e sp e ct to such aooount ohall not b e charg e abl e with
liabilities arising out of any oth e r busin e ss the oompany may
conduct. Notwithstanding any other provisions of law a
company may:
44^ with r e sp e ct to any s e parate aooount r e gist e r e d
with th e Securities and Exchange Commiooion as
a unit investment trust, exercise voting rights in
conn e ction with any s ecurities of a regulated
inv e otm e nt oompany rogiotorod und e r th e Inv e st
m e nt Company Aot of 1 9 10 and h e ld in such
sopamte accounts in accordance " ^ 'ith instructions
from persons having intorooto in such account
ratably ao d e t e rmin e d by th e oompany; or
(2) with r e sp e ct to any s e parat e aooount r e gist e r e d
with tho Soouritio o and Exchange Commission as
a management investment company, establish for
1505
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
such aooount a oommittoo, board, or other body,
tho membero of whioh may or may not b e
othop . vioo affiliat e d v , <\th ouoh oompany and may
bo olootod to ouoh momborsbjp by tho voto of
pwraons having intoroet in o uch account ratably
ao dotorminod by tho oompany; Suoh oonrniitt ee ,
board or other body may hav e tbo power, exer
cifloblo alono or in oonjunction with others, to .0112
Statutory Authority G.S. 58-2-40; 58-7-95 (r).
manage such aoparato account and tho invoot
mont of ito aooeto.
SUBCHAPTER IIC - ANALYSIS AND
EXAMINATIONS
SECTION .0100 - GENERAL PROVISIONS
CUSTODLVL AND nSCAL AGENCY
AGREEMENT
Tho Model Cuotodial Agre e ment d e signated oc 1 1 NfCAC
(e) — A oompany, oommittoo, board or other body may llA .01 8 1 hoo boon doomed aoo e ptabl e by th e D e partment
mako ouch other provisions in roopoct to any such soporato for the custody of tho socuritios of a domestic insuranoo
company. — Other custodial agreomonts in substxmtially tho
same form aa this model ar e aoo e ptabl e — provid e d the
account as may bo deomod appropriate to facilitate oompli
onoo with requiromento of any federal or state law now or
boroafter in offoot; provid e d that tho Commiooionor appro^' e o
suoh provisions ao not hazardous to tho public or tho
company's policyholdors in this state.
A oompany shall maintain in e ach suoh s e parat e aooount
ooooto with a value at l e aot e qual to th e rooerveo and other
contract liabilities with rospoct to such account, except as
may othorv i 'iso bo approved by the Commissioner. — Rules
und e r any provision of th e inourano e laws of this state or
any r e gulation applioabl e to th e offio e rs and dir e ctors of
insurance oomponioo with roflp>oct to conflicts of interest
shall also apply to membero of any separate aooounts'
oommitt e o, board or oth e r similar body. — No officer or
director of suoh oompany nor any mombor of th e commit
too, board or body of a separate account shall rooeivo
directly or indirectly any commission or any other compon
sation with r e sp e ot to the purohas e or sol e of ass e ts of ouoh
separate aooount.
Statutory Authority G.S. 58-2-40; 58-7-95.
.0306 DISCLOSURE REQUIREMENTS
The prospectus or offering memorandum of a life insur-
ance company applying for a license to sell variable con-
tracts in this State shall include the following language in at
least 10-point boldface capital letters:
"ATTENTION NORTH CAROLINA
INVESTORS: THE INFORMATION
CONTAINED D^ THIS VARIABLE
CONTRACT OFFERING HAS NOT
BEEN APPROVED OR DISAP-
PROVED BY THE COMMISSIONER
OF INSURANCE OF THE STATE OF
NORTH CAROLINA: NOR HAS THE
COMMISSIONER RULED UPON THE
ADEOUACY OR ACCURACY OF
THIS DOCUMENT.
CONTRACTS SOLD
VARIABLE
BY PROSPEC-
TUS MIGHT NOT BE COVERED BY
THE NORTH CAROLINA LIFE AND
HEALTH INSURANCE GUARANTY
ASSOCIATION."
minimum provisions and safeguards of th e model are
included thoroin. Domestic insurance companies subject to
G.S. 58. Articles \ through 67. that contract with third
parties for custodial and fiscal agency services shall execute
written agreements evidencing the services to be rendered.
The agreements shall contain the minimum provisions and
safeguards contained in the Model Custodial Agreement or
Model Custodial and Fiscal Agency Agreement. Domestic
insurance companies shall file their written agreements and
any amendments with the Commissioner. The Model
Custodial Agreement and the Model Custodial and Fiscal
Agency Agreement are on file in the Financial Compliance
Division of the Department and are available for inspection
or copying in accordance with G.S. 58-6-5.
Statutory Authority G.S. 58-2-40; 58-19-30(b)(4); 58-34-10.
.0113 MODEL CUSTODUL AND FISCAL
AGENCY AGREEMENT
The — Model — Cuotodial — oad — Fisool — Agenoy — Agreomont
d e signated as 11 NCAC llA .01 8 5 hoo boon d ee med
acceptable by tho Dopartmont for tho custody and control of
tho oeouritioQ of a domestic insurance company. — Othof
ouotodial and fioool ag e noy agreem e nts in substantially tho
sam e form as this mod e l are aooeptable provided tho
minimum provis i ons and safeguards of the model ore
included thoroin.
Statutory Authority G.S. 58-79; 58-79.1.
.0118 COLLECTION PROCEDURES FOR
EXAMINATION EXPENSE
(a) Each e xamin e r will p e riodioally prepar e an "Exam
inor's Exponso and Days Worked Report" for oxaminationa
of each insurance oompany. — An examiner participating on
th e e xamination — of a for e ign incurano e — oompany will
forward tho originals of the reports to tho Commiooion e r
p>oriodically and retain copies for tho oxaminor'o own
record. — Tho examiner in charge on the examination — ef
domostio insuranc e oompanieo will appro' i ^o and forward th e
originals of e aoh e xaminer's reports to th o Commiooion e r
periodically and retain ono copy of oach report for his
records.
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NORTH CAROLINA REGISTER
November 1, 1995
1506
PROPOSED RULES
(b) Upon vorification of tho oxaminor'o oxponoo foporto,
tho CommJooionor or hio dooignoo ohall prepar e an invoic e
and p e riodioally bill th e incurono e oompanioo for oharg e o for
days workod. as woll as tho oxponso ohargoe for oach
oxaminor. — All invoices for oxponso a and daily v i 'ork ohargoa
arc to bo bill e d dir e ctly by th e D e partment to th e company
under e xamination. — Th e company io dirootod by tho invoic e
to aubmit ito paymonto directly to tho Dopartnwnt to tho
company under oxamination. — Tho company is diroctod by
tho invoice to oubmit ito paym e nts dir e ct to th e D e partm e nt
for both oxpenooo and ohargoo for dayo work e d and to mak e
checks payable to tho Department of Insurance.
(c) All funds received from daily chargea are for tho sole
purpoDO of funding th e direct and indirect coot of op e rations
of th e Field Audit Section of th e Financial Evaluation
Division of tho Department. — All charges are to bo deter
mined on a formula basis, to be adjusted from time to time
ao need and ciroumotances r e quir e .
Statutory Authority G.S. 58-2-40; 58-2-1 33(c).
.0132 ACCOUNTING FOR SALVAGE AND
SUBROGATION
Whenever any insurance company is operating in a manner
that is hazardous to its policyholders, creditors, or the
general public for any of the reasons set out in G.S. 58-30-
60(b), or whenever any insurance company is "impaired".
as defined in G.S. 58-30-12(a)(2). or "insolvent", as defined
in G.S. 58-30-10-13. the Commissioner shall disregard any
credit taken by the company No insurance company shall
tak e credit in any annual or interim financial statement filed
with the Department for salvage or subrogation recoveries
until the recoveries have been reduced to cash or its equiva-
lent. Salvage or subrogation recoveries reduced to cash or
its equivalent shall be accounted for as an offset to losses
paid. This Rule does not apply to title or mortgage guar-
anty insurers.
Statutory Authority G.S. 58-2-40; 58-7-162.
SECTION .0300 - HEALTH
MAINTENANCE ORGANIZATIONS
.0313 NET EARNED INCOME DEFINmON:
HMO
As used in G.S. 58-67-5(1), "net earned income" means
the sum of net income or loss and interest on surplus notes
for the calendar year.
Statutory Authority G.S. 58-2-40; 58-67-5 fi).
SECTION .0500 - REINSURANCE
.0504 TRUST AGREEMENTS QUALIFIED
UNDER G.S. 58-7-26
(a) As used in this Rule:
(1) "Beneficiary" means the entity for whose sole
benefit the trust has been established and any
successor of the beneficiary by operation of law.
If a court of law appoints a receiver as successor
in interest to the named beneficiary, then the
named beneficiary is the court -appointed
domiciliary conservator, rehabilitator. or liqui-
dator.
(2) "Financial institution" means a qualified United
States financial institution as defined in G.S. 58-
7-26(c).
£3} "Grantor" means the entity that has established
a trust for the sole benefit of the beneficiary.
When established in conjunction with a reinsur-
ance agreement, the grantor is the unlicensed,
unaccredited assuming insurer.
("4) "Obligations" means:
(A) Reinsured losses and allocated loss expenses
paid by the ceding company, but not recovered
from the assuming insurer:
(B) Reserves for reinsured losses reported and
outstanding;
(C) Reserves for reinsured losses incurred but not
reported; and
CD) Reserves for allocated reinsured loss expenses
and unearned premiums.
(h) Required conditions for trust agreements,
(ll The trust agreement shall be entered into be-
tween the beneficiary, the grantor, and a trustee,
which trustee shall be a qualified financial
institution.
(2} The trust agreement shall create a trust account
into which assets shall be deposited.
(3) All assets in the trust account shall be held by
the trustee at the trustee's office in the United
States.
(4) The trust agreement shall provide that:
(A) The beneficiary may withdraw assets from the
trust account at any time, without notice to the
grantor, subject only to written notice from the
beneficiary to the trustee;
(B) No other statement or document is required to
be presented in order to withdraw assets,
except that the beneficiary may be required to
acknowledge receipt of withdrawn assets;
(C) It is not subject to any conditions or qualifica-
tions outside of the trust agreement; and
(D) It shall not contain references to any other
agreements or documents except as provided
for under Subparagraph (II) of this Paragraph.
(5) The trust agreement shall be established for the
sole benefit of the beneficiary.
(6) The trust agreement shall require the trustee to:
(A) Receive assets and hold all assets in a safe
place;
(B) Determine that all assets are in such form that
the beneficiary, or the trustee upon direction
by the beneficiary, may whenever necessary
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negotiate any such assets, without consent or
signature from the grantor or any other per-
son:
(C) Furnish to the grantor and the beneficiary a
statement of all assets in the trust account upon
its inception and at intervals no less frequent
than the end of each calendar quarter:
(D) Notify the grantor and the beneficiary within
10 days before the making of any deposits or
withdrawals from the trust account:
(E) Upon written demand of the beneficiary,
immediately take all steps to transfer all
right, title, and interest in the assets held in the
trust account to tjie beneficiary and deliver
physical custody of the assets to the benefi-
ciary: and
(F") Allow no substitutions or withdrawals of assets
from the trust account, except on written
instructions from the beneficiary: except that
the trustee may, without the consent of, but
with notice to. the beneficiary and upon the
call or maturity of any trust asset, withdraw
the asset upon the condition that the proceeds
are paid into the trust account.
(7) The trust agreement shall proyide that at least 30
days, but not more 45 days, before termination
of the trust account, that written notification of
termination shall be delivered by the trustee to
the beneficiary.
(8) The trust agreement shall be made subject to and
governed by the laws of the state in which the
trust is established.
(9) The trust agreement shall prohibit invasion of
the trust corpus for the purpose of paying com-
pensation to. or reimbursing the expense of, the
trustee.
(10) The trust agreement shall provide that the trustee
shall be liable for its own negligence, willful
misconduct or lack of good faith.
(1 1) When a trust agreement is established in con-
junction with a reinsurance agreement covering
risks other than life, annuities, or accident and
health, where it is customary practice to provide
a trust agreement for a specific purpose, such a
trust agreement may provide that the ceding
insurer shall undertake to use and apply amounts
drawn upon the trust account, without diminu-
tion because of the insolvency of the ceding
insurer or the assuming insurer, for the follow-
ing purposes:
(A) To pay or reimburse the ceding insurer for the
assuming insurer's share under the specific
reinsurance agreement regarding any losses
and allocated loss expenses paid by the ceding
insurer, but not recovered from the assuming
insurer, or for unearned premiums due to the
ceding insurer if not otherwise paid by the
assuming msurer:
(B) To make payment to the assuming insurer of
any amounts held in the trust account that
exceed 102 percent of the actual amount re-
quired to fund the assuming insurer's obliga-
tions under the specific reinsurance agreement:
or
(C) Where the ceding insurer has received notifi-
cation of termination of the trust account and
where the assuming insurer's entire obligations
under the specific reinsurance agreement
remain unliquidated and undischarged 10 days
before termination date, to withdraw amounts
equal to the obligations and deposit those
amounts in a separate account, in the name of
the ceding insurer in any qualified United
States financial institution as defined in G.S.
58-7-26(c) apart from its general assets, in
trust for such uses and purposes specified in
Parts (b)(ll)(A) and (B) of this Rule as may
remain executory after such withdrawal and
for any period after the termination date.
(12) The reinsurance agreement entered into in
conjunction with the trust agreement may, but
need not, contain the provisions required by Part
(d)(iyB) of this Rule, as long as these required
conditions are included in the trust agreement.
(c) Permitted conditions for trust agreements.
(1) The trust agreement may provide that the trustee
may resign upon delivery of a written notice of
resignation, effective not less than 90 days after
receipt by the beneficiary and grantor of the
notice: and that the trustee may be removed by
the grantor by delivery to the trustee and the
beneficiary of a written notice of removal,
effective not less than 90 days after receipt by
the trustee and the beneficiary of the notice:
provided that no such resignation or removal
shall be effective until a successor trustee has
been duly a ppointed and approved by the benefi-
ciary and the grantor and all assets in the trust
have been duly transferred to the new trustee.
(2) TTie grantor may have the unqualified right to
vote any shares of stock in the trust account and
to receive from time to time payments of any
dividends or interest upon any shares of stock or
obligations included in the trust account. Any
such interest or dividends shall be either for-
warded promptly upon receipt to the grantor or
deposited in a separate account established in the
grantor's name.
(3) The trustee may be given authority to invest,
and accept substitutions of. any funds in the
account: provided that no investment or substitu-
tion shall be made without prior approval of the
beneficiary, unless the trust agreement specifies
categories of investments acceptable to the
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beneficiary and authorizes the trustee to invest
funds and to accept substitutions which the
trustee determines are at least equal in market
value to the assets withdrawn and that are con-
sistent with the restrictions in Part (dlfDCB) of
this Rule.
(4) The trust agreement may provide that the benefi-
ciary may at any time designate a party to which
all or part of tlie trust assets are to be trans-
ferred. Such transfer may be conditioned upon
the trustee receiving, prior to or simultaneously,
other specified assets.
(5) The trust agreement may provide that, upon
termination of the trust account, all assets not
previously withdrawn by the beneficiary shall,
with written approval by the beneficiary, be
delivered over to the grantor.
(d) Additional conditions applicable to reinsurance
agreements.
( 1) A reinsurance agreement that is entered into in
conjunction with a trust agreement and the
establishment of a trust account, may contain
provisions that:
(A) Require the assuming insurer to enter into a
trust agreement and to establish a trust account
for the benefit of the ceding insurer, and
specifying what the agreement is to cover;
(B) Stipulate that assets deposited in the trust
account shall be valued according to their
current fair market value and shall consist only
of cash (United States legal tender), certificates
of deposit (issued by a United States bank and
payable in United States legal tender), or
investments of the types permitted by G.S. 58.
Article 2 21 any combination of the above;
provided that such investments are issued by
an entity that is not the parent, subsidiary, or
affiliate of either the grantor or the benefi-
ciary. The reinsurance agreement may further
specify the types of investments to be depos-
ited. Where a trust agreement is entered into
in conjunction with a reinsurance agreement
covering risks other than life, annuities, and
accident and health, the trust agreement may
contain the provisions required by this para-
graph in lieu of including such provisions in
the reinsurance agreement;
(C) Require the assuming insurer, prior to deposit-
ing assets with the trustee, to execute assign-
ments or endorsements in blank; or to transfer
legal title to the trustee of aU shares, obliga-
tions, or any other assets requiring assign-
ments, in order that the ceding insurer, or the
trustee upon the direction of the ceding in-
surer, may whenever necessary negotiate these
assets without consent or signature from the
assuming insurer or any other entity;
(D) Require that all settlements of account between
the ceding insurer and the assuming insurer be
made in cash or its equivalent; and
(E) Stipulate that the assuming insurer and the
ceding insurer agree that the assets in the trust
account, established pursuant to the provisions
of the reinsurance agreement, may be with-
drawn by the ceding insurer at any time,
notwithstanding any other provisions in the
reinsurance agreement; and shall be utilized
and a pplied by the ceding insurer or its succes-
sors in interest by operation of law, including
any liquidator, rehabilitator. receiver, or
conservator of such company, without diminu-
tion because of insolvency on the part of the
ceding insurer or the assuming insurer, only
for the following purposes:
(i} To reimburse the ceding insurer for the
assuming insurer's share of premiums
returned to the owners of policies rein-
sured under the reinsurance agreement
because of cancellations of such policies;
(ii) To reimburse the ceding insurer for the
assuming insurer's share of surrenders and
benefits or losses paid by the ceding in-
surer pursuant to the provisions of the
policies reinsured under the reinsurance
agreement;
(iii) To fund an account with the ceding insurer
in an amount at least equal to the deduc-
tion, for reinsurance ceded, from the
ceding insurer liabilities for policies ceded
under the agreement. The account shall
include, but not be limited to. amounts for
policy reserves, claims and losses incurred
(including losses incurred but not re-
ported), loss adjustment expenses, and
unearned premium reserves; and
(iv) To pay any other amounts the ceding
insurer claims are due under the reinsur-
ance agreement.
(2) The reinsurance agreement may also contain
provisions that:
(A) Give the assuming insurer the right to seek
approval from the ceding insurer to withdraw
from the trust account all or any part of the
trust assets and transfer those assets to the
assuming insurer, provided:
(i) The assuming insurer shall, at the time of
withdrawal, replace the withdrawn assets
with other qualified assets having a market
value equal to the market value of the
assets withdrawn so as to maintain at all
times the deposit in the required amount.
or
(ii) After withdrawal and transfer, the market
value of the trust account is no less than
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102 percent of the required amount.
The ceding insurer shall not unreasonably or
arbitrarily withhold its a pproval.
(B) Provide for:
(i) The return of an^ amount withdrawn in
excess of the actual amounts required for
Subparts fd'XlKE'Xi). (ii) and (iii), or in
the case of Subpart ('d')(n(E)(iv) of this
Rule, any amounts that are subsequently
determined not to be due; and
(ii) Interest payments, at a rate not in excess
of the prime rate of interest, on the
amounts held pursuant to Subpart
(dXlKE'Xiii) of this Rule.
(C) Permit the award by any arbitration panel or
court of competent iurisdiction of:
(i) Interest at a rate different from that pro-
vided in Subpart (d)(2¥BUii) of this Rule,
(ii) Court of arbitration costs.
(iii) Attorney's fees, and
(iv) Any other reasonable expenses.
(3) Financial reporting. A trust agreement may be
used to reduce any liability for reinsurance
ceded to an unauthorized assuming insurer in
financial statements required to be filed with the
Department in compliance with the provisions of
this Rule when established on or before the date
of filing of the financial statement of the ceding
insurer. Further, the reduction for the existence
of an acceptable trust account may be ug to the
current fair market value of acceptable assets
available to be withdrawn from the trust account
at that time, but such reduction shall be no
greater than the specific obligations under the
reinsurance agreement that the trust account was
established to secure.
(4) Existing agreements. Notwithstanding the
effective date of this Rule, any trust agreement
in existence before January l^ 1996, will con-
tinue to be acceptable until June 30, 1996, at
which time the agreements will have to be in full
compliance with this Rule for the trust agree-
ment to be acceptable.
(5) The failure of any trust agreement to specifically
identify the beneficiary as defined in Paragraph
(a) of this Rule shall not be construed to affect
any actions or rights that the Commissioner may
take or possess pursuant to the provisions of the
laws of this State.
Statutory Authority G.S. 58-2-40; 58-7-21; 58-7-26.
.0505 LETTERS OF CREDIT
(a) As used in this Rule:
(1) "Beneficiary" means the domestic insurer for
whose benefit the letter of credit has been estab-
lished and any successor of the beneficiary by
operation of law. If a court of law a ppoints a
receiver as successor in interest to the named
beneficiary, then the named beneficiary is the
court-appointed domiciliary conservator, rehabil-
itator. or liquidator.
(2) "Financial Institution" means a qualified United
States financial institution as defined in G.S. 58-
7-26(c).
(b) In order to qualify under G.S. 58-7-26(a)(3). a letter
of credit must be clean, irrevocable, unconditional and
issued or confirmed by a qualified United States financial
institution as defined in G.S. 58-7-26(b). The letter of
credit shall contain an issue date and date of expiration and
shall stipulate that the beneficiary need only draw a sight
draft under the letter of credit and present it to obtain funds
and that no other document need be presented. The letter
of credit shall indicate that it is not subject to any condition
or qualifications outside of the letter of credit. The letter of
credit itself shall not contain reference to any other agree-
ments, documents, or entities, except as provided in
Subparagraph (h)(1) of this Rule.
(c) The heading of the letter of credit may include a
boxed section that contains the name of the applicant and
other a ppropriate notations to provide a reference for the
letter of credit. The boxed section shall be clearly marked
to indicate that such information is for internal identification
purposes only.
(d) The letter of credit shall contain a statement to the
effect that the obligation of the qualified United States
financial institution under the letter of credit is in no way
contingent upon reimbursement with respect thereto.
(e) The term of the letter of credit shall be for at least
one year and shall contain an "evergreen clause" which
prevents the expiration of the letter of credit without due
notice from the issuer. The "evergreen clause" shall
provide for a period of not less than thirty 30 days' notice
before the expiration or non-renewal date.
(f) The letter of credit shall state whether it is subject to
and governed by the laws of this State or the Uniform
Customs and Practice for Documentary Credits of the
International Chamber of Commerce (Publication 400), and
a]] drafts drawn thereunder shall be presentable at an office
in the United States of a qualified United States financial
institution.
(g) If the letter of credit is made subject to the Uniform
Customs and Practice for Documentary Credits of the
International Chamber of Commerce (Publication 400); then
the letter of credit shall specifically address and make
provision for a extension of time to draw against the letter
of credit in the event that one or more of the occurrences
specified in Article 19 of Publication 400 occur.
(h) The letter of credit shall be issued or confirmed by a
qualified United States financial institution authorized to
issue letters of credit, pursuant to G.S. 58-7-26(c).
(i) Reinsurance agreement provisions:
(1) The reinsurance agreement in conjunction with
which the letter of credit is obtained may contain
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November 1, 1995
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PROPOSED RULES
provisions that:
(A) Require the assuming insurer to provide letters
of credit to &e ceding insurer and specify what
they are to cover.
(B) Stipulate that the assuming insurer and ceding
insurer agree that the letter of credit provided
by the assuming insurer pursuant to the provi-
sions of the reinsurance agreement may be
drawn upon at anx time, notwithstanding any
other provisions in die agreement, and shall be
utilized by the ceding insurer or its successors
in interest only for one or more of the follow-
ing reasons:
(i) To reimburse the ceding insurer for the
assuming insurer's share of premiums
returned to the owners of policies rein-
sured under the reinsurance agreement on
account of cancellations of such policies;
(ii) To reimburse the ceding insurer for the
assuming insurer's share of surrenders and
benefits or losses paid by the ceding in-
surer under the terms and provisions of the
policies reinsured under the reinsurance
agreement;
(iii) To fund an account with the ceding insurer
in an amount at least equal to the deduc-
tion, for reinsurance ceded, from the
ceding insurer's liabilities for policies
ceded under the agreement (such amount
shall include, but not be limited to.
amounts for policy reserves, claims and
losses incurred and unearned premium
reserves); and
(iv) To pay any other amounts the ceding
insurer claims are due under the reinsur-
ance agreement.
(O All of the provisions of Subparagraph (U of
this Paragraph shall be applied without diminu-
tion because of insolvency on the part of the
ceding insurer or assuming insurer.
(2) Nothing contained in Subparagraph (1) of this
Paragraph shall preclude the ceding insurer and
assuming insurer from providing for:
(A) An interest payment, at a rate not in excess of
the prime rate of interest, on the amounts held
pursuant to Subaragraph (l)(B)(iii) of this
Paragraph; or
(B) The return of any amounts drawn down on the
letters of credit in excess of the actual amounts
required for the above or. in the case of
Subpart (l)(B)(iv) of this Paragraph, any
amounts that are subsequently determined not
to be due.
(3) When a letter of credit is obtained in conjunction
with a reinsurance agreement covering risks
other than life, annuities, and accident and
health, where it is customary practice to provide
a letter of credit for a specific purpose, then the
reinsurance agreement may, in lieu of Part
(DrS) of this Paragraph, require that the parties
enter into a "Trust Agreement" . which may be
incorporated into the reinsurance agreement or
be a separate document.
(i) A letter of credit may not be used to reduce any
hability for reinsurance ceded to an unauthorized assuming
insurer in financial statements filed with the Department
unless an acceptable letter of credit with the filing ceding
insurer as beneficiary has been issued on or before the date
of filing of the financial statement. The reduction for the
letter of credit may be ug to the amount available under the
letter of credit but no greater than the specified obligation
imder the reinsurance agreement that the letter of credit was
intended to secure.
Statutory Authority G.S. 58-2-40; 58-7-26.
SUBCHAPTER IID - PROXY: LIQUIDATION
AND MERGER
SECTION .0100 - GENERAL PROVISIONS
.0108 NOTICE OF HEARING ON PLAN
OF EXCHANGE OF CAPITAL STOCK
Notioo of a public h e aring upon tho t e rmo, oonditiono and
provisions of a plan of oxohongo of capital otook shall bo
publiflhod and mailod in aocordanoo with tho proviflionfl of
G.S. 5 8 9 5.
Statutory Authority G.S. 58-2-40; 58-9-5.
.0109 CHARGES FOR HEARING
CONDUCTED PURSUANT TO
G.S. 58-9-5
Tho costs of a public hoaring, and tho dopartmont' s
pr e Uminar>' work r e lative thoroto, oholl b e aooooood upon the
p e tition e ro on th e baaio opeoifiod in th e plan of exchang e for
any oxpnansoQ incurrod thorofor. — Tho Dopartmont will bo
roimburood for the total numbor of man days oxpondod for
preliminai^^ work and for the actual h e aring and th e amount
charg e d shall be at tho som e rat e ohargod to inouranoo
companies for tho examination of thoir books and rooords.
Statutory Authority G. S. 58-2-40; 58-9-5.
SECTION .0300 - MERGER: GENERAL
NATURE
.0302 PROCEDURE FOR SUBNflSSION
OF PLAN OF MERGER - STOCK
COMPANY
A plan of m e rg e r or oonsolidation of a dom e otio otook
company must be prepar e d in aooordano e with th e general
business laws of North Carolina and must bo submittod
under petition to tho Commissionor, in accordanco with tho
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NORTH CAROLINA REGISTER
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PROPOSED RULES
provioiona of G.S. 5 8 7 150, who will sohodulo a public plan. — Notioo ghall oIbo bo publiohod by tho domo s tic
hoaring on the plan and ioouo on order boo e d on hio find oompanioo onoo a w ee k for hvo oono e outive ^ ^ 'ooko with the
ing 6 . — Any order ioouod by the Commiooionor approving loot publioation date not l e os than 30 dayo b e for e the date of
such plan will make no appraioal of of oxprooa any opinion
with roapoct to tho valuoo of shoroo of atock or tho rates of
the hearing and shall bo publiohod in tho major morning
nowspapora in tho Citioe of Wilmington, Raleigh, Groono
exohangeo of ohoroo of otook of th e m e rging or oonoolidating boro, Charlott e and Aoh e villo, North Carolina and oitios
oompanioo and will in every inotono e bo oubjaot to th e
approval of the otockholdors of tho companioa ao required by
Statutory Authority G.S. 55-107 et seq.; 58-2-40; 58-7-150.
.0303 NOTICE OF PUBLIC HEARING ON
PLAN OF MERGER FOR STOCK
COMPANIES
Written notice of tho public hoaring on a plan of morger
or conaolidation ahall bo given to tho atockholdora of tho
merging or oonoolidating oompanioB at l e ast 20 dayo b e for e .0202
tho dat e of th e h e aring.
In addition, notice ahall bo publiahod by tho domootio
companioa onoo a wook for iwo consocutivo wooka with tho
laot publioation date not l e oo than 20 dayo b e for e th e dat e of
th e h e aring and ohall bo publioh o d in th e major morning
nowapapors in tho Citioa of Wilmington, Raleigh, Groona
boro, Charlotte, and Aohevillo, North Carolina, and the
location of th e principal offioo of tho domootio oompani e a,
if oth e r than th e aforem e ntion e d.
Both written and publiohod notice ahall bo in a form ao
proacribod by tho Commi s aionor.
Statutory Authority G.S. 58-2-40; 58-7-150.
.0304 PROCEDURE FOR SUBMISSION
OF PLAN OF MERGER - MUTUAL
COMPANY
A plan of morgor of conaolidation of a domoatic mutual
company must bo prepared in acoordanco with tho general
buoineoo lawo of North Carolina and muot be oubmitted
und e r p e tition to the Commiasion e r, in acoordano e with th e
provisions of G.S. 5 8 7 150, who will schedule a public
hoaring on tho plan at a date aub s oquont to tho date of tho
sp e cial mooting of policyhold e r s of th e m e rging or oonooli
dating domootio mutual company. — If th e plan io adopt e d by
tho policyholdors at tho apocial mooting of policyholders by
vote of two thirds of tho mombora voting thereon, tho
Commiooion e r ohall continue with tho public h e aring and
isouo an order baaed on his findings.
Statutory Authority G.S. 58-2-40; 58-7-150.
.0305 NOTICE OF PUBLIC HEARING ON
PLAN OF MERGER FOR MUTUAL
COMPANIES
Written notiooo of th e dat e , tim e and plac e of th e public
h e aring on a plan of m e rg e r or oonoolidation of a dom e otic
mutual company ahall bo included in tho notice of tho
special mooting of the policyholdors called to vote on said
wh e r e in th e principal offio e o of th e dom e otic oompanioo ar e
located, if other than tho aforementioned . — Publiahod notioo
ahall bo in a form as proacribod by the Commiaaione pr
Statutory Authority G.S. 58-2-40; 58-7-150.
CHAPTER 14 - ADMISSION REQUIREMENTS
SECTION .0200 - FORMATION OF
DOMESTIC INSURANCE COMPANY
INFORMATION REQUIRED AFTER
ORGANIZATIONAL MEETING
In accordance with the procedures established by G.S.
58-7-40, the following infonnatlon must be submitted to
the commissioner for approval prior to the issuance of a
certificate of authority to a newly organized company:
(1) a certificate of proceedings of the organizational
meeting setting forth a copy of the articles of
incorporation with the names of the subscribers
thereto; the date of the first meeting and of any
adjournments thereof; certified copies of the
minutes of the meeting; certified copies of the
bylaws; an opening balance sheet of the corpo-
ration's books and records and confirmation of
the initial capitalization funds in escrow or
otherwise, for the company; and
(2) duly prepared and executed forms furnished by
the commissioner as follows:
(a) check sheet and analysis of application for
admission in the form described in 11 NCAC
14 .0414;
(b) application for license in the form described
in 11 NCAC llA .0404 for life, aooidont and
h e alth, and firo and oosuolty insurono e oompa
ni e a; 11 NCAC 11 A .0 4 07 for fratomal or
d e ro; 11 NCAC llA .0 4 05 for hospital and
m e dioal s e rvio e oorporations; and 1 1 NCAC
HA .0 4 06 for d e ntal sorvioo oorporations; in
11 NCAC 14 .0432:
(c) petition for admission to do business in North
Carolina in the form described in 1 1 NCAC
14 .0415;
(d) power of attorney for services of legal process
in the form described in 1 1 NCAC 14 .0416;
and
(e) power of attorney to sell securities on deposit
in the form described in 1 1 NCAC 14 .0417.
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Statutory Authority G.S. 58-2-40; 58-5-30; 58-7-35;
58-7-40; 58-16-30; 58-65-50.
SECTION .0400 - DESCRIPTION OF
FORMS
.0430 ANNUAL GROSS PREMIUM
TAX RETURN FOR PURCHASING
GROUPS
The i\nnual Gross Premium Tax Return for Purchasing
Groups i s the form for filing and remitting annual
premium taxoo by purchasing groups rcgiatorod to do
business in North Carolina under the federal and North
Carolina risk retention laws.
Statutory Authority G.S. 58-22-35(h).
.0431 ANNUAL GROSS PREMIUM
TAX RETURN FOR RISK
RETENTION GROUPS
The j\nnual Gross Premium Tax Return for Risk
Retention Groups is the form for filing and remitting
annual premium taxes by risk retention groups registered
to do business in North Carolina under the federal and
North Carolina risk retention laws.
Statutory Authority G.S. 58-22-20(3).
.0432 APPLICATION FOR LICENSE:
INSURANCE COMPANY
The application for license is a form used by an insurance
company to request authority to transact specific lines of
insurance business in North Carolina. This form is used for
initial authority by each applicant insurance company and
for an annual renewal license by each licensed insurance
company. The form includes the company's name,
company's address, president and secretary of the company.
a schedule of license fees, and the lines of authority being
requested.
Statutory Authority G.S. 58-2-40; 58-7-40; 58-16-5.
SECTION .0600 - SURPLUS LINES
.0603
FINANCIAL INFORMATION
REQUIRED
Each request for surplus lines eligibility shall be accompa-
nied by the following financial information so that verifica-
tion of compliance with the eligibility requirements can be
made:
annual statements for the preceding two years in
the form required under G.S. 58-2-165 for compa-
nies licensed in at least one state in the United
States;
annual fmancial reports for the preceding two
years in the English language and in U.S. dollar
(1)
(2)
amounts for alien insurance companies;
(3) a certified copy of the latest report on examination
or, if the company is not required to be examined
by any jurisdiction, a copy of the latest CPA
report and management letter;
(4) actuarial certification of the loss reserves and loss
adjustment expense reserves for the most recent
year if such certification is available; aad
(5) a copy of the NAIC fmancial ratio (IRIS) results
for the most recent year, along with an explana-
tion for any unusual values if such tests are per-
formed; and
(6) an alien insurer must file a copy of its United
States trust agreement; and must also file with and
be approved by the Nonadmitted Insurers Informa-
tion Office of the NAIC to be considered for
eligibility in North Carolina.
Statutory Authority G.S. 58-2-40; 58-2-165; 58-21-20.
SECTION .0700 - FEDERAL RISK
RETENTION ACT ENTITIES
.0705 FILCVG AND PA'iTVIENT OF
PREMIUM TAXES
(a) Each risk retention group registered to transact
business in North Carolina shall file with the Secretary of
Revenue. ConnruBBionor, on or before March 15 of each
year, a report of all premiums paid to it for risks insured
within North Carolina. Carolina in the form d e oorib e d in 1 1
NCAC U .0^31.
(b) Each purclmaing group rogistorod to transact businoas
in North Carolina shall file with the Commissionor, on or
b e fore March 15 of oaoh y a ar, a report of all promiumo pai d
to it for riokfl intmr e d within th e state in the form dooori teed'
in 11 NCAC 11 .0130.
Statutory Authority G.S. 58-22-20; 58-22-35.
Notice is hereby given in accordance with G.S.
150B-21.2 that the N.C. Department of Insurance
intends to amend rules cited as 11 NCAC 13 .0317 and
.0319.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conducted at 10:00 a.m. on
November 28, 1995 at the Dobbs Building, 3rd Floor
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611.
Reason for Proposed Action: Necessary to be in compli-
ance with statute changes made during the last session of the
General Assembly.
Comment Procedures: Written comments and questions
1513
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
should be directed to Fred Mohn, 430 N. Salisbury Street,
Raleigh, NC 27611, (919) 733-2200. Oral presentations
may be made at the public hearing.
Fiscal Note: These Rules do not affect the expenditures or
revenues of local government or state funds.
CHAPTER 13 - SPECIAL SERVICES DIVISION
SECTION .0300 - INSURANCE PREMIUM
FINANCE COMPANIES
.0317 TEN-DAY NOTICE
The ten-day written notice of intent to cancel as described
in Gonoral Statute 5 8 60(1) G.S. 58-35-85(1) shall include
the name and address of the premium finance company, the
premium finance agreement number, the date the notice is
mailed, the amount of the installment in default and all other
pertinent information. A copy of the ten-day notice, or a
listing of delinquent insureds showing the same general
information shall be mailed sent to the insurance agent
shown on the premium finance agreement at the same time
notice is given to the insured.
Statutory Authority G.S. 58-2-40; 58-35-85(1).
.0319 EFFECTIVE DATE OF CANCELLATION
When an insurance premium finance company cancels an
insurance policy by using a power of attorney signed by the
insured, the effective date of cancellation as stated in the
notice of cancellation shall be no earlier than the date the
notice of cancellation is mail e d sent to the insurance
company.
Statutory Authority G.S. 58-2-40; 58-35-85(2).
Notice is hereby given in accordance with G.S.
150B-21.2 that the N.C. Department of Insurance
intends to amend rule cited as 11 NCAC 16 .0602.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conducted at 10:00 a.m. on
November 28, 1995 at the Dobbs Building, 3rd Floor
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611.
Reason for Proposed Action: Necessary to comply with
changes made during the last session of the General Assem-
bly.
Comment Procedures: Written comments and questions
should be directed to Walter James, 430 N. Salisbury Street,
Raleigh, NC 27611, (919) 733-3284. Oral presentations
may be made at the public hearing.
Fiscal Note: This Rule does not affect the expenditures or
revenues of local government or state funds.
CHAPTER 16 - ACTUARIAL SERVICES DIVISION
SECTION .0600 - HEALTH MAINTENANCE
ORGANIZATION FILINGS AND STANDARDS
.0602 HMO GENERAL FILING REQUIREMENTS
(a) All schedules of premiums for enrollee coverage for
health care services and amendments to schedules of
premiums that are filed with the Department shall be
submitted to and stamped received by the Life and Health
Division and indicate whether the filing is an original or
amended filing. All data requirements prescribed by this
Section must be submitted within 30 days after the date that
the filing is stamped received, or the filing will be deemed
to be disapproved. Subsequent data submissions for rate
filings deemed to be in non-compliance with this Section
shall be made directly to the Department's Actuarial
Services Division within the 30 day period.
(b) All filings shall be accompanied by:
(1) A certification by aa a qualified actuary that the
premiums applicable to an enrollee are not
individually determined based on the status of
his health and that such premiums are estab-
lished in accordance with actuarial principles for
various categories of enrollees and are not
excessive, inadequate, or unfairly discrimina-
tory.
(2) Actuarial data supporting the schedule of premi-
ums as prescribed by 11 NCAC 16 .0603, 11
NCAC 16 .0604, 11 NCAC 16 .0605, 11
NCAC 16 .0206 and 11 NCAC 16 .0207.
(c) All data and schedules that are required to be filed by
this Section shall be filed in duplicate.
(d) As used in Paragraph (b) of this Rule, "qualified
actuary" means an individual who is an Associate or Fellow
of tlie Society of Actuaries or a Member of the American
Academy of Actuaries and has at least three years of
substantive experience in the HMO or another managed
health care field.
Statutory Authority G.S. 58-2-171; 58-67-50(b); 58-67-150.
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1514
PROPOSED RULES
TITLE ISA - DEPARTMENT OF ENVIRONMENT, HEALTH, AND NATURAL RESOURCES
Notice is hereby given in accordance with G. S. 150B-21. 2 that the EHNR - Environmental Management Commission
intends to amend rule cited as ISA NCAC 2B .0304. Text shown in italics has been adopted by the EMC and is pending
approval by the Rules Review Commission. Proposed effective date for the text in italics is January 1, 1996.
Proposed Effective Date: April 1, 1996.
A Public Hearing will be conducted at 7:00 p.m. on December 5, 1995 at the Mountain Horticulture Crops Resource and
Extension Center, 2016 Fanning Bridge Road, Fletcher, North Carolina.
Reason for Proposed Action:
NORTH CAROLINA ENVIRONMENTAL MANAGEMENT COMMISSION
ANNOUNCEMENT OF RULE-MAKING TO RECLASSIFY THE LOWER AND UPPER FRENCH BROAD
RIVERAND THE MILLS RIVER IN BUNCOMBE, HENDERSON AND TRANSYLVANIA COUNTIES
TTie N.C. Department of Environment, Health, and Natural Resources on behalf of the Environmental Management
Commission (EMC) will conduct a public hearing in order to receive public comments on a proposal to reclassify two
sections of the French Broad River (referred to as the "lower" and "upper" French Broad River) and one section of the Mills
River in Buncombe, Henderson and Transylvania Counties.
PROPOSAL:
LOWER FRENCH BROAD RIVER
Affected Area:
Current Class:
Proposed Class:
Affected Local
Governments:
Summary:
PROPOSAL:
Affected Area:
Current Class:
French Broad River from Mills River to a point 0. 1 miles upstream of the Boring Mill Branch,
including tributaries (French Broad River Basin)
WS-IV and WS-IV CA (Critical Area)
C
Buncombe and Henderson Counties, the Town of Fletcher, and the City of Asheville
This section of the French Broad River, currently designated as a WS-IV water supply, is
approximately 67,803 acres in size and is located in Buncombe and Henderson Counties. The
Asheville-Buncombe Water Authority and Henderson County requested this area be reclassified
from its current WS-IV water supply classification to a nonwater supply classification. This
section of the French Broad is no longer planned for use as a drinking water supply source by the
local governments. Four local governments have land use authority within the watershed. They
are the Town of Fletcher, the City of Asheville, and Buncombe and Henderson Counties. The
proposed Class C reclassification would remove the current drinking water supply WS-IV
classification and the requirements for the Town of Fletcher, the City of Asheville and Buncombe
and Henderson Counties to continue implementing drinking water supply ordinances for this
section of the French Broad River. The classification will continue to protect all uses other than
water supply, including protection as swimmable and fishable waters.
UPPER FRENCH BROAD RIVER
French Broad River from 0.5 miles downstream of Little River to a point 0.6 miles upstream of
Mills River, including tributaries, is proposed as WS-IV. The French Broad River from 0.6 miles
upstream of the Mills River to Mills River, including tributaries, is proposed as WS-IV CA
(French Broad River Basin)
C and WS-IV
1515
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
Proposed Class:
WS-IV and WS-IV CA (Critical Area)
I
Affected Local
Goyemments:
Summary:
I
The Town of Laurel Park, and Henderson and Transylvania Counties
This section of the French Broad River drainage area is approximately 40,982 acres in size and
is located in Henderson and Transylvania Counties. The Asheville-Buncombe Water Authority
and Henderson County requested this area be reclassified as WS-IV to protect its use for drinking
water supply purposes. Three local governments have land use authority within this area. They
are the Town of Laurel Park, and Henderson and Transylvania Counties. The proposed
reclassification to Classes WS-IV and WS-IV CA would require these local governments to adopt
and implement drinking water supply ordinances for this section of the French Broad River that,
at a minimum, meet the state's requirements. In turn, the state will not allow new landfills or
residual application sites within the Critical Area. New industrial wastewater discharges within
the Critical Area will also be required to meet more stringent effluent discharge limits. NOTE:
A section of this area (from Mills Pond Creek to the Mills River) is already classified as WS-IV
due to the overlap of the lower French Broad River. However, the section from 0.6 miles
upstream of Mills River to Mills River would change from WS-IV to WS-IV CA.
The following chart summarizes the requirements related to the WS-FV water supply classification.
These are the major provisions of the water supply regulation (15A NCAC 2B .0100, and .0200);
to review all of them, write or call the contact pterson listed at the end of this announcement for
more information. Local governments may adopt and implement more protective ordinances to
protect the drinking water supply source, if they choose to do so.
Requirements for a WS-IV Classification
Development Criteria
W/O Engineered W/Engineered
PROPOSAL:
Wastewater
Stormwater Mgmt., Stormwater Mgt.,
10%/70%
Dischargers
Low Density Opt. Hiph Density Opt.
Provision
Critical Area
Domestic &
2du*/acre or up to 24-50% built upon
Not
Industrial (1)
24 % built upon area (2)
area (2)
Allowed
Protected
Domestic &
2du*/acre or up to 24-70% built upon
Allowed
Area
Industrial
24% built upon area (2,3)
area (2,3)
itled "Notes"
for additional information on these requirements.
MILLS RIVER
^
Two options are proposed for the lower section of the Mills River. The Asheville-Buncombe
Water Authority and Henderson County requested that the lower section of the Mills River be
reclassified as WS-II. However, the state uses a system of examining the types of permitted
wastewater discharges and the current land use within the proposed affected area to determine the
most appropriate classification. This information is compared with the water supply watershed
protection rules in order to propose a water supply classification. The size of the affected area
is also considered.
The Division of Environmental Management's records indicate the presence of four domestic
wastewater discharges in this section of the Mills River. The presence of these wastewater
discharges qualifies this section of the river for a WS-HI classification. Since the Authority and
County requested a WS-II classification, we are requesting comments on the following two
options: a WS-II or a WS-III classification for this section of the Mills River. The Mills River,
upstream of the City of Hendersonville's water supply intake, is already classified as a WS-II and
WS-I and is not affected by this proposal.
Option Ml
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1516
PROPOSED RULES
Affected Area:
Current Class:
Proposed Class:
Affected Local
Governments:
Summary:
Mills River from the City of Hendersonville's water supply intake to a point 0.7 miles upstream
of the mouth of Mills River, including tributaries, is prop>osed as WS-HI, and from a p>OLnt 0.7
rmles upstream of the mouth of the Mills River to the French Broad River is projxjsed as WS-HI
CA
WS-IV
WS-m and WS-IH CA (Critical Area)
Henderson County
The section of the Mills River proposed for reclassification is approximately 1,629 acres in size
and is located in Henderson County. Ninety-four acres of the total proposed affected area is
Critical Area (CA). Henderson County has land use authority for this area. The pro|X)sed
reclassification to Classes WS-IU and WS-IU CA would require local governments having land use
authority for the area proposed for reclassification to adopt and implement drinking water supply
ordinances that, at a minimum, meet the state's requirements. In turn, the state would restrict new
permits for wastewater discharges to this section of the Mills River. Only those that qualify for
a General Permit (for example, swimming pool filter backwash) would be allowed in the Critical
Area and new domestic and non-process industrial wastewater (such as non-contact cooling water
discharge) would be allowed in the remainder of the watershed area proposed for reclassification.
The following chart summarizes the requirements related to the WS-UI water supply classification.
These are the major provisions of the water supply regulation (15A NCAC 2B .0100, and .0200);
to review all of them, write or call the contact person listed below for more information. Local
governments may adopt and implement more protective ordinances to protect the drinking water
supply source if they choose to do so.
Requirements for a WS-III Classification
Critical Area
Balance of
Watershed
Wastewater
Dischargers
General
Permits
Domestic &
Non-process
industrial
Development Criteria
W/O Engineered W/Engineered
Stormwater Mgmt.,
Low Density Opt.
ldu*/acre or up to
12% built upon area
Stormwater Mgmt.,
High Density Opt.
12-30% built upon
area
2du*/acre or up to
24% built upon
area
24-50% built upon
area
10%/70%
Provision
Not
Allowed
Allowed
Please see the secfion entitled "Notes" for additional information on these requirements.
Option #2
Affected Area:
Current Class:
Proposed Class:
Affected Local
Governments:
Summary:
Mills River from the City of Hendersonville's water supply intake to a point 0.7 miles upstream
of th mouth of the Mills River, including tributaries, is proposed as WS-II, and from a ptoint 0.7
miles upstream of Mills River to the French Broad River is proposed as WS-II CA
WS-IV
WS-U and WS-U CA (Critical Area)
Henderson County
The section of the Mills River proposed for reclassification is approximately 1,629 acres in size
1517
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
»
and is located in Henderson County. Ninety-four acres of the total proposed affected area is
Critical Area (CA). Henderson County has land use authority for this area. The projxjsed
reclassification to Classes WS-II and WS-II CA would require local governments having land use
authority for the area proposed for reclassification to adopt and implement drinking water supply
ordinances that, at a minimum, meet the state's requirements. In turn, the state would restrict new
permits for wastewater discharges to this section of the Mills River to only those that qualify for
a General Permit (for example, swimming pool filter backwash). The Environmental Management
Commission (EMC) may "grandfather in" existing wastewater discharges, but these discharges
may be required to meet more stringent effluent limits.
The following chart summarizes the requirements related to the WS-II water supply classification.
These are the major provisions of the water supply regulation (15A NCAC 2B .0104, and .0200);
to review all of them, write or call the contact person listed below for more information. Local
governments may adopt and implement more protective ordinances to protect the drinking water
supply source if they choose to do so.
Requirements for a WS-II Classification
Development Criteria
W/O Engineered
W/Engineered
Wastewater
Stormwater Mgmt.,
Stormwater Mgmt.,
10%/70%
Dischareers
Low Density Opt.
Hieh Densitv Opt.
Provision
Critical Area
General
ldu*/2 acres or up to
6-24% built upon
Not
Permits
6 % built upon area
area
Allowed
Balance of
General
ldu*/acre or up to
12-30% built upon
Allowed
Watershed
Permits
12% built upon area
area
Notes:
I
(1)
(2)
(3)
Critical area is one-half mile and draining to water supply intakes in a river or stream.
Protected Area is ten miles and draining to water supply intakes located in a river or stream.
Requirements applicable to new development. Existing single family lots are exempt.
Buffers required along all pereimial waters indicated on most recent versions of USGS 1:24,000
scale topographic maps or as determined by local government studies; 30 foot buffer for low
density and 100 foot buffer for high density development.
Local governments will assume ultimate resp)onsibility for the operation and maintenance of
stormwater management controls.
10%/70% provision allows the use of 10% of each local government's jurisdiction within the
watershed for new development and expansions to existing development up to 70% built-upon
area, without stormwater controls, if using low density option throughout remainder of water
supply.
Residential development may apply dwelling units per acre or use percent built-upon surface area.
Non-residential development must use percent built-upon surface area.
Agricultural operations must maintain a ten foot vegetated buffer or equivalent control as
determmed by the Soil and Water Conservation Commission in the Critical Area (this buffer is
not required outside of the Critical Area). Animal operations deemed permitted under 15A NCAC
2H .0200 are allowed in all water supply watersheds.
New industrial process wastewater discharges are allowed but will require additional treatment
requirements. (WS-IV)
Applies only to projects requiring a Sediment/Erosion Control Permit. (WS-IV)
1/3 acre lot or 36% built-upon area is allowed for projects without a curb and gutter street system.
(WS-IV)
PUBLIC INPUT:
\
The purpose of this announcement is to encourage those interested in this proposal to provide
comments. You may either attend the public hearing and make relevant verbal comments or
submit written comments, data or other relevant information by January 5, 1996. The Hearing
Officer may limit the length of time that you may speak at the public hearing, if necessary, so that
all those who wish to speak may have an opportunity to do so. We encourage you to submit
written comments as well.
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1518
PROPOSED RULES
Public Hearing: Location: Mountain Horticulture Crops Resource & Extension Center
2016 Fanning Bridge Road
Fletcher, NC
Date:
Time:
December 5, 1995
7:00 p.m.
Comment
Procedure:
It is very important that all interested and fXJtentiaUy affected persons or parties make their views
known to the EMC whether in favor of or opposed to any and all provisions of the proposed water
supply reclassification being noticed. THE EMC MAY, IN ACCORDANCE WITH N.C.G.S.
150B-21.2, MAKE CHANGES IN FINAL RULES WITHOUT RENOTICE AS LONG AS THE
ADOPTED RULES DO NOT DIFFER SUBSTANTIALLY FROM THE PROPOSED RULES.
IN ACCORDANCE WITH THIS AUTHORITY, THE EMC MAY ADOPT HNAL MANAGE-
MENT REQUIREMENTS OR RULES THAT ARE MORE OR LESS STRINGENT THAN
THOSE BEING NOTICED IF THE EMC DETERMINES THAT THE HNAL ADOPTED
RULES DO NOT DIFFER SUBSTANTIALLY FROM THE PROPOSED RULES. ALL
INTERESTED AND POTENTIALLY AFFECTED PERSONS ARE STRONGLY ENCOUR-
AGED TO READ THE ENTIRE ANNOUNCEMENT AND SUPPORTING INFORMATION,
AND COMMENT ON THE PROPOSAL PRESENTED. The proposed effective date for final
rules pursuant to this rule-making process is April 1, 1996. Written comments may be submitted
to the person listed below.
AUTHORITY:
G.S. 143-214.1 Amendments to the Schedule of Classifications for the French Broad River Basin
as referenced in 15A NCAC 2B .0304.
ADDITIONAL
INFORMATION:
Further explanations and details of the proposed reclassification may be obtained by writing or
calling:
Steve Zoufaly
DEHNR/Division of Enviroimiental Management
P.O. Box 29535
Raleigh, NC 27626-0535
(919) 733-5083, extension 566
Fiscal Note: This Rule ejects the expenditures or revenues of local government funds. A fiscal note was submitted to the
Fiscal Research Division on September 11, 1995, OSBM on September 13, 1995.
CHAPTER 2 - ENVmONTVIENTAL MANAGEMENT
SUBCHAPTER 2B - SURFACE WATER
STANDARDS: MONITORING
SECTION .0300 - ASSIGNMENT OF STREAM
CLASSinCATIONS
.0304 FRENCH BROAD RIVER BASIN
(a) Places where the schedules may be inspected:
(1) Clerk of Court:
Avery County
Buncombe County
Haywood County
Henderson County
Madison County
Mitchell County
Transylvania County
Yancey County
(2) North Carolina Department of Enviroimient,
Health, and Natural Resources
Asheville Regional Office
Interchange Building
59 Woodfin Place
Asheville, North Carolina
(b) Unnamed Streams. Such streams entering Tennessee
will be classified "B."
(c) Tlie French Broad River Basin Schedule of Classifica-
tions and Water Quality Standards was amended effective:
(1) September 22, 1976;
(2) March 1, 1977;
(3) August 12, 1979;
(4) April 1, 1983;
(5) August 1, 1984;
(6) August 1, 1985;
(7) February 1, 1986;
1519
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
(8) May 1, 1987;
(9) March 1, 1989;
(10) October 1, 1989;
(11) January 1, 1990;
(12) August 1, 1990;
(13) August 3, 1992;
(14) October 1, 1993;
(15) July 1, 1995;
(16) November 1, 1995;
a?) January 1. 1996:
(18) April 1. 1996.
(d) The Schedule of Classifications and Water Quality
Standards for the French Broad River Basin was amended
effective March 1, 1989 as follows:
(1) Cataloochee Creek (Index No. 5-41) and all
tributary waters were reclassified from Class
C-trout and Class C to Class C-trout ORW and
Class C ORW.
(2) South Fork Mills River (Index No. 6-54-3)
down to Queen Creek and all tributaries were
reclassified from Class WS-I and Class
WS-m-trout to Class WS-I ORW and Class
WS-m-trout ORW.
(e) The Schedule of Classifications and Water Quality
Standards for the French Broad River Basin was amended
effective October 1, 1989 as follows: Cane River (Index
No. 7-3) from source to Bowlens Creek and all tributaries
were reclassified from Class C trout and Class C to Class
WS-m trout and Class WS-III.
(0 The Schedule of Classifications and Water Quality
Standards for the French Broad River Basin was amended
effective January 1, 1990 as follows: North Toe River
(Index No. 7-2) from source to Cathis Creek (Christ
Branch) and all tributaries were reclassified from Class C
trout and Class C to Class WS-m trout and Class WS-III.
(g) The Schedule of Classifications and Water Quality
Standards for the French Broad River Basin was amended
effective August 3, 1992 with the reclassification of all
water supply waters (waters with a primary classification of
WS-I, WS-n or WS-ni). These waters were reclassified to
WS-I, WS-U, WS-ni, WS-IV or WS-V as defined in the
revised water supply protection rules, (15A NCAC 2B
.0100, .0200 and .0300) which became effective on August
3, 1992. In some cases, streams with primary classifica-
tions other than WS were reclassified to a WS classification
due to their proximity and linkage to water supply waters.
In other cases, waters were reclassified from a WS classifi-
cation to an alternate appropriate primary classification after
being identified as downstream of a water supply intake or
identified as not being used for water supply purposes.
(h) The Schedule of Classifications and Water Quality
Standards for the French Broad River Basin was amended
effective October 1, 1993 as follows: Reasonover Creek
[Index No. 6-38-14-(l)] from source to Reasonover Lake
Dam and all tributaries were reclassified from Class B Trout
to Class WS-V and B Trout, and Reasonover Creek [Index
No. 6-38-14-(4)] from Reasonover Lake Dam to Lake Julia
Dam and all tributaries were reclassified from Class C Trout
to Class WS-V Trout.
(i) The Schedule of Classifications and Water Quality
Standards for the French Broad River Basin was amended
effective July 1, 1995 with the reclassification of Cane
Creek [Index Nos. 6-57-(l) and 6-57-(9)] from its source to
the French Broad River from Classes WS-IV and WS-IV Tr
to Classes WS-V, WS-V Tr and WS-IV.
(j) The Schedule of Classifications and Water Quality
Standards for the French Broad River Basin was amended
effective November 1, 1995 as follows: North Toe River
[Index Numbers 7-2-(0.5) and 7-2-(37.5)] from source to a
point 0.2 miles downstream of Banjo Branch, including
tributaries, has been reclassified from Class WS-III, WS-III
Trout and WS-HI Trout CA (critical area) to Class WS-IV
Trout, WS-IV, WS-IV Trout CA, and C Trout.
(k) The Schedule of Classifications and Water Quality
Standards for the French Broad River Basin was amended
effective January 1 . 1996 as follows: Stokelv Hollow [Index
Numbers 6-121. 5-(l) and 6-121. 5-(2)] from source to mouth
of French Broad River has been reclassified from Class
WS-H and Class WS-U CA to Class C.
JT) The Schedule of Classifications and Water Quality
Standards for the French Broad River Basin was amended
April j_i 1996 with the reclassification of the French Broad
River [Index No. 6-(l)1 from a point 0.5 miles downstream
of Little River to Mill Pond Creek to Class WS-IV; French
Broad River [Index No. 6-(5 1.5)1 from a point 0.6 miles
upstream of Mills River to Mills River to Class WS-IV CA
(Critical Area), from Mills River to a point 0.1 miles
upstream of Boring Mill Branch to Class C; and the Mills
River [Index No. 6-54-(5)1 as follows:
Option Number \
From City of Hendersonville water supp ly intake
to a point 0.7 miles upstream of mouth of Mills
River to Class WS-III. and from a point 0.7
miles upstream of mouth of Mills River to
French Broad River to Class WS- m CA (Criti-
cal Area).
Option Number 2
From City of Hendersonville water supp ly intake
to a point 0.7 miles upstream of mouth of Mills
River to Class WS-II. and from a point 0.7
miles upstream of mouth of Mills River to
French Broad River to Class WS-II CA (Critical
Area).
m
m
Statutory Authority
143-21 5. 3 (a)(1).
G.S. 143-214.1; 143-215.1:
Notice is hereby given in accordance with G.S.
150B-21.2 that the DEHNR - Environmental Manage-
ment Commission intends to amend rules cited as ISA NCAC
2D .0531, .0804 - .0805, .0901, .0917 - .0924, .0926 -
.0928, .0934 - .0935, .0937, .0951, .0953 - .0954, .1301
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1520
PROPOSED RULES
- .1302, .1304; ISA NCAC 2Q .0401 - .0402; and repeal
rules cited as ISA NCAC 2Q .0403 - .0418.
Temporary: Rules ISA NCAC 2D .1301 - .1302, and
.1304 were filed as temporary rules effective October 23,
1995 for a period of 180 days or until the permanent rule
becomes effective, whichever is sooner.
Proposed Effective Date: April 1, 1996.
A Public Hearing will be conducted at 7:00 p.m. on
November 20, 1995 at the Archdale Building, Groundfloor
Hearing Room, 512 N. Salisbury Street, Raleigh, North
Carolina.
Reason for Proposed Action:
ISA NCAC 2D .0531, .0901 - Clarification on definition of
Volatile organic compound allowing EPA 's definition to be
adopted as found in the Code of Federal regulations.
ISA NCAC 2D .0804 - .080S - To exempt military airfields
and to rex'ise the definition of adjacent parking lots, decks,
or garages.
ISA NCAC 2D .0917 -.0924, .0928, .0934 - .093S, .0937,
.0951, .0953 - .0954 - To clarify reasonably available
control technology (RACT) ndes, to clarify and make minor
revisions to Stage 1 and 11 rules.
ISA NCAC 2D .0926 - .0927 - To prohibit the owner or
operator of a bulk gasoline terminal or bulk gasoline plant
from loading a gasoline truck tank or trailer that is not
certified as complying with the vacuum-pressure require-
ments.
ISA NCAC 2D .1301 - .1302, .1304 - To remove the
oxygenated gasoline requirement for the Raleigh/Durham
Metropolitan Statistical Area.
ISA NCAC 2Q .0401 - .0418 - To adopt the federal
requirements for acid rain procedures by reference.
Comment Procedures: All persons interested in these
matters are invited to attend the public hearing. Any person
desiring to comment for more than three minutes is requested
to submit a written statement for inclusion in the record of
proceedings at the public hearing. The hearing record will
remain open until December 20, 1995, to receive additional
written statements. Comments should be sent to and
additional information concerning the hearing or the
proposals may be obtained by contacting:
Mr. Thomas C. Allen
Division of Environmental Management
P. O. Box 29580
Raleigh, NC 27626-0580
(919) 733-1489 (phone)
(919) 733-1812 (fax)
Fiscal Note: Rules ISA NCAC 2D .0804 - .0805 affect the
expenditures or revenues of local government finds.
Fiscal Note: Rules ISA NCAC 2D .0531, .0901, .0917 -
.0924, 0926 - .0928 .0934 - .0935, .0937. .0951, .0953 -
.0954, .1301 - .1302. .1304; 15 A NCAC 2Q .0401 - .0418
do not qffea the expenditures or revenues of local govern-
ment or state funds.
SUBCHAPTER 2D - AIR POLLUTION CONTROL
REQUIREMENTS
SECTION .0500 - E>aSSION CONTROL
STANDARDS
.0531 SOURCES IN NON ATTAINMENT AREAS
(a) Applicability.
(1) Ozone Nonattainment Areas. This Rule applies
to major stationary sources and major modifica-
tions of sources of volatile organic compounds
or nitrogen oxides for which construction com-
mences after the area in which the source is
located is designated Ln accordance with Part (A)
or (B) of this Subparagraph and which are
located in:
(A) areas designated in 40 CFR 81.334 as
nonattainment for ozone, or
(B) any of the following areas and in that area
only when the Director notices in the North
Carolina Register that the area is in violation
of the ambient air quality standard for ozone:
(i) Charlotte/Gastonia, consisting of
Mecklenburg and Gaston Counties; with
the exception allowed under Paragraph (k)
of this Rule;
(ii) Greensboro/Winston-Salem/High Point,
consisting of Davidson, Forsyth, and
Guilford Counties and that part of Davie
County bounded by the Yadkin River,
Dutchmans Creek, North Carolina High-
way 801, Fulton Creek and back to
Yadkin River; or
(iii) Raleigh/Durham, consisting of Durham
and Wake Counties and Dutchville Town-
ship in Granville County.
Violations of the ambient air quality standard for
ozone shall be determined in accordance with 40
CFR 50.9.
(2) Carbon Monoxide Nonattainment Areas. This
Rule applies to major stationary sources and
major modifications of sources of carbon mon-
oxide located in areas designated in 40 CFR
81.334 as nonattainment for carbon monoxide
and for which construction commences after the
area in which the source is located is listed in 40
CFR 81.334 as nonattainment for carbon mon-
oxide.
(3) Redesignation to Attainment. If any county or
part of a county to which this Rule applies is
later designated in 40 CFR 81.334 as attainment
for ozone or carbon monoxide, all sources in
1521
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
that county subject to this Rule before the redes-
ignation date shall continue to comply with this
Rule.
(b) For the purpose of this Rule the definitions contained
in 40 CFR 51.165(a)(1) and 40 CFR 51.301 shall apply.
The reasonable period specified in 40 CFR
51.165(a)(l)(vi)(C)(l) shall be seven years.
(c) This Rule is not applicable to:
(1) complex sources of air pollution that are regu-
lated only under Section .0800 of this Subchap-
ter and not under any other rule in this Subchap-
ter;
(2) emission of pollutants at the new major station-
aiy source or major modification located in the
nonattainment area which are pollutants other
than the pollutant or pollutants for which the
area is nonattainment. (A major stationary
source or major modification that is major for
volatile organic compounds or nitrogen oxides is
also major for ozone.);
(3) emission of pollutants for which the source or
modification is not major;
(4) a new source or modification which qualifies for
exemption under the provision of 40 CFR
51.165(a)(4); and
(5) emission of compounds that are listed under 40
CFR 51.100(s) as having been determined to
have negligible photochemical reactivity except
carbon monoxide, the following volatilo organic
oompounde:
(A) — oarbon monoxid e ,
(B) — carbon dioxide,
(€) — carbonic acid,
(&) — motallio oarbid e o or oarbonat e e,
(E) — ammonium carbonat e ,
(F) — mothano,
(G) — othano,
(H^ — triohlorofluorom e thon e (ohlorofluorooarbon
-W>T
®-
dichlorodifluoromothono (chlorofluorocorbon
(J) — chlorodifluorom e than e (ohlorofluorooarbon
22)
(K) — trifluoromothano (fluorocarbon 23),
(t^ — trichlorotrifluoroothono — (chlorofluorocorbon
44^
(M)-
diohlorototrafluoro e than e (ohlorofluorooarbon
444)t
(N) — chloropontafluoroothono — (ohlorofluorooarbon
fO) — 1,1,1 triohloro e tbon e (m e thyl ohioroform),
(P) — dichloromothano (mothylono chlorido),
(Q) — dichlorotrifluoroothano
(hydroohlorofluorooarbon 133),
(R) — t e trafluoro e than e (hydrofluorooarbon 131a),
fS) — dichlorofluoroothono (hydroohlorofluorooarbon
■M4fe>r
^f) — ohlorodifluoroothano (hydrochlorofluorocarbon
142b)t
(U) — 2 ohloro 1,1,1,3 t e trafluoro e than e
(hydroohlorofluorooarbon 12 4 ),
fV) — pontafluorootbano (hydrofluorooarbon 125),
fW) — 1,1,3,3 t e trafluoro e than e (hydrofluorooarbon
(X) — 1,1,1 trifluoroothono (hydrofluorooarbon
1 4 3a),
f¥) — 1,1 difluorooarbon (hydrofluorooarbon 153a),
(Z) — porfluorooarbon compoundfl that fall into those
olaasos!
(4) oyolio) — branoh e dt — or lin e ar oomplotoly
fluorinat e d alkanoo;
(ii) cyolic, — branched, — or linear oomplotoly
fluorinated othoro with no unoaturationo;
(iii) oyolio, branched, — or linear compl e tely
fluorinat e d — t e rtiary — amin e s — with — ae
unBaturatione; and
(iv) sulfur containing porfluorocarbona with no
unoatumtionii and with eulfiir bondo only to
oarbon and fluorine.
(d) 15A NCAC 2Q .0102 and .0302 are not applicable to
any source to which this Rule applies. The owner or
operator of the source shall apply for and receive a permit
as required in 15A NCAC 2Q .0300 or .0500.
(e) To issue a permit to a source to which this Rule
applies, the Director shall determine that the source will
meet the following requirements:
(1) The source will emit the nonattainment pollutant
at a rate no more than the lowest achievable
emission rate;
(2) The owner or operator of the proposed new or
modified source has demonstrated that all major
stationary sources in the State which are owned
or operated by this person (or any entity control-
ling, controlled by, or under common control
with this person) are subject to emission limita-
tions and are in compliance, or on a schedule for
compliance which is federally enforceable or
contained in a court decree, with all applicable
emission limitations and standards of this Sub-
chapter which EPA has authority to approve as
elements of the North Carolina State Implemen-
tation Plan for Air Quality;
(3) The source will obtain sufficient emission reduc-
tions of the nonattainment pollutant from other
sources in the nonattainment area so that the
emissions from the new major source and
associated new minor sources will be less than
the emissions reductions by a ratio of at least
1.00 to 1.15 for volatile organic compounds and
nitrogen oxides and by a ratio of lesser than one
to one for carbon monoxide. The baseline for
this emission offset shall be the actual emissions
of the source from which offset credit is ob-
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1522
PROPOSED RULES
tained. Emission reductions must not include
any reductions resulting from compliance (or
scheduled compliance) with applicable rules in
effect prior to the application. The difference
between the emissions from the new major
source and associated new minor sources of
carbon monoxide and the emission reductions
must be sufficient to represent reasonable further
progress toward attaining the Ambient Air
Quality Standards. The emissions reduction
credits must also conform to the provisions of 40
CFR 51.165(a)(3)(ii)(A) through (G); and
(4) The North Carolina State Implementation Plan
for Air Quality is being carried out for the
nonattainjnent area in which the proposed source
is located.
(f) When a particular source or modification becomes a
major stationary source or major modification solely by
virtue of a relaxation in any enforceable limitation estab-
lished after August 7, 1980, on the capacity of the source or
modification to emit a pollutant, such as a restriction on
hours of operation, then the provisions of this Rule shall
apply to the source or modification as though construction
had not yet begun on the source or modification.
(g) To issue a permit to a source of a nonattainment
pollutant, the Director shall determine, in addition to the
other requirements of this Rule, that an analysis (produced
by the permit applicant) of alternative sites, sizes, produc-
tion processes, and environmental control techniques for
source demonstrates that the benefits of the source signifi-
cantly outweigh the environmental and social costs imposed
as a result of its location, construction, or modification.
(h) Approval of an application with regard to the require-
ments of this Rule shall not relieve the owner or operator of
the responsibility to comply fully with applicable provisions
of other rules of this Chapter and any other requirements
under local, state, or federal law.
(i) When a source or modification subject to this Rule
may affect the visibility of a Class I area named in Para-
graph (c) of Rule .0530 of this Section, the following
procedures shall be followed:
(1) Tlie owner or operator of the source shall pro-
vide an analysis of the impairment to visibility
that would occur as a result of the source or
modification and general commercial, industrial
and other growth associated with the source or
modification:
(2) The Director shall provide written notification to
all affected Federal Land Managers within 30
days of receiving the permit application or
within 30 days of receiving advance notification
of an application. The notification shall be at
least 30 days prior to the publication of the
notice for public comment on the application.
TTie notification shall include a copy of all
information relevant to the permit application
including an analysis provided by the source of
the potential impact of the proposed source on
visibility;
(3) The Director shall consider any analysis con-
cerning visibility impairment performed by the
Federal Land Manager if the analysis is received
within 30 days of notification. If the Director
finds that the analysis of the Federal Land
Manager fails to demonstrate to his satisfaction
that an adverse impact on visibility will result in
the Class I area, the Director shall provide in
the notice of public hearing on the application,
an explanation of his decision or notice as to
where the explanation can be obtained;
(4) TTie Director shall only issue permits to those
sources whose emissions will be consistent with
making reasonable progress towards the national
goal of preventing any future, and remedying
any existing, impairment of visibility in manda-
tory Class I areas when the impairment results
from man-made air fwllution. In making the
decision to issue a permit, the Director shall
consider the cost of compliance, the time neces-
sary for compliance, the energy and nonair
quality environmental impacts of compliance,
and the useful life of the source; and
(5) The Director may require monitoring of visibil-
ity in or around any Class I area by the pro-
posed new source or modification when the
visibility impact analysis indicates possible
visibility impairment.
The requirements of this Paragraph shall not apply to
nonprofit health or nonprofit educational institutions.
(j) The version of the Code of Federal Regulations
incorporated in this Rule is that as of January 1, 1989, and
does not include any subsequent amendments or editions to
the referenced material.
fk) Paragraphs (e) and (g) of this Rule shall not apply to
a new major stationary source or a major modification of a
source of volatile organic compounds or nitrogen oxides for
which construction commences after the area in which the
source is located has been designated in accordance with
Part (a)(1)(B) of this Rule and before the area is designated
in 40 CFR 81.334 as nonattainment for ozone if the owner
or operator of the source demonstrates, using the Urban
Airshed Model (UAM), that the new source or modification
will not contribute to or cause a violation. The model used
shall be that maintained by the Division of Environmental
Management. The Division of Environmental Management
shall only run the model after the permit application has
been submitted. The permit application shall be incomplete
until the modeling analysis is completed. TTie owner or
operator of the source shall apply such degree of control and
obtain such offsets necessary to demonstrate the new source
or modified source will not cause or contribute to a viola-
tion.
Statutory Authority G.S. 143-215. 3(a)(1);
1523
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
143-215. 107(a)(5); 143-215. 108(b).
SECTION .0800 - COMPLEX SOURCES
.0804 AIRPORT FAdLITIES
(a) This Rule does not apply to military airfields.
(b) Before constructing or modifying any airport facility
designed to haye at least 100,000 annual aircraft operations,
or at least 45 peak-hour aircraft operations (one operation
equals one takeoff or one landing), the owner or developer
of the airport facility shall apply for and haye received a
permit as described in 15A NCAC 2Q .0600, and shall
comply with all terms and conditions therein.
Statutory Authority G.S. 143-2 15. 3 (a)(1); 143-215.109.
.0805 PARKING FACILITIES
(a) The owner or developer of a transportation facility
shall not construct or modify a parking area or associated
buildings until he has applied for and received a permit
under 15A NCAC 2Q .0600 where the parking area is for:
(1) construction of a new or expansion of an exist-
ing parking lot or combination of parking lots
resulting in a parking capacity of at least 1500
spaces or a potential open parking area of at
least 450,000 square feet (1500 spaces at 300
square feet per stall);
(2) modification of an existing jjarking lot or combi-
nation of parking lots with a parking capacity of
at least 1500 spaces that will be expanded by at
least 500 spaces beyond the last permitted num-
ber of spaces;
(3) construction of a new or expansion of an exist-
ing parking deck or garage resulting in a parking
capacity of at least 750 spaces or a (potential
parking area of at least 225,000 square feet (750
spaces at 300 square feet per stall);
(4) modification of an existing parking deck or
garage with a parking capacity of at least 750
spaces that will be expanded by at least 250
spaces beyond the last permitted number of
spaces;
(5) construction of a new or expansion of an exist-
ing combination of parking lots, decks, and
garages resulting in a parking capacity of at least
1000 spaces or a potential parking area of at
least 300,000 square feet; or
(6) modification of an existing combination of
parking lots, decks, and garages with a parking
capacity of at least 1000 spaces that will be
expanded by at least 500 spaces beyond the last
permitted number of spaces.
(b) New or modified parking lots, decks, or garages with
a parking capacity of 500 or more spaces and existing or
proposed parking facilities that:
(1) are directly adjacent to each other and the
combined parking capacities are greater than
those defined in Paragraph (a) of this Rule, and
(2) use the same public roads or traffic network,
shall be considered one lot or deck. Transportation facilities
are considered to be directly adjacent if they are within 100
meters of each other in a suburban or rural area or 50
meters of each other in an urban area and if there are no
existing physical barriers, such as. buildings or terrain-
Parking lota, docks, or gomgoa that ore connoctod such that
a person may drive from one to another without having to
trav e l on a public otr ee t or road ohall be oonoid e r e d one lot
or d e ok. — Parking loto, deoko, or gomgos of oomm eg
ownorship soparatod by a public atroot or road but within
150 foot of one anothoF and with no existing pbyoioal barrier
( e .g. buUdingD, terrain, etc.) will bo consid e red one facility
for p e rmit and modeling purpoo e a.
(c) Temporary barriers shall not be used to reduce the
capacity of an otherwise affected transportation facility to
less than the amount which requires permitting. The design
and plan shall clearly show the total parking capacity.
(d) Phased construction shall be evaluated and permitted
for a period not to exceed five years from the date of
application.
Statutory Authority G.S. 143-215. 3(a)(1); 143-215.109.
SECTION .0900 - VOLATILE ORGANIC
COMPOUNDS
.0901 DEFINITIONS
For the purpose of this Section, the following definitions
apply:
(1) "Coating" means a functional, protective, or
decorative film applied in a thin layer to a surface.
(2) "Coating applicator" means an apparatus used to
apply a surface coating.
(3) "Coating line" means one or more apparatus or
operations in a single line wherein a surface
coating is applied, dried, or cured and which
include a coating applicator and flashoff area and
may include an oven or associated control devices.
(4) "Continuous vapor control system" means a vapor
control system which treats vapors displaced from
tanks during filling on a demand basis without
intermediate accumulation.
(5) "Delivered to the applicator" means the condition
of coating after dilution by the user just before
application to the substrate.
(6) "Flashoff area" means the space between the
application area and the oven.
(7) "High solids coating" means a coating which
contains a higher jsercentage of solids and a lower
percentage of volatile organic compounds and
water thereby potentially lowering volatile organic
comjxjund emissions; usually paints with greater
than 60 percent solids by volume are considered
high solids coatings although the term is often
applied to any coating that meets the Environmen-
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1524
PROPOSED RULES
tal Protection Agency Control Technology Guide-
lines.
(8) "Hydrocarbon" means any organic compound of
carbon and hydrogen only.
(9) "Incinerator" means a combustion apparatus
designed for high temperature operation in which
solid, semisolid, liquid, or gaseous combustible
wastes are ignited and burned efficiently and from
which the soUd and gaseous residues contain little
or no combustible material.
(10) "Intermittent vapor control system" means a vapor
control system which employs an intermediate
vapor holder to accumulate vapors displaced from
tanks during filling. The control device treats the
accumulated vapors only during automatically
controlled cycles.
(1 1) "Loading rack" means an aggregation or combina-
tion of loading equipment arranged so that all
loading outlets in the combination can be con-
nected to a tank truck or trailer parked in a speci-
fied loading space.
(12) "Low solvent coating" means a coating which
contains a substantially lower amount of volatile
organic compound than conventional organic
solvent borne coatings; it usually falls into one of
three major groups of high solids, waterbome, or
powder coatings.
(13) "Organic material" means a chemical compound
of carbon excluding carbon monoxide, carbon
dioxide, carbonic acid, metallic carbides or car-
bonates, and ammonium carbonate.
(14) "Oven" means a chamber within which heat is
used to bake, cure, polymerize, or dry a surface
coating.
(15) "Potential emissions" means the quantity of a
fxjilutant which would be emitted at the maximum
capacity of a stationary source to emit the pollut-
ant under its physical and operational design. Any
physical or operational limitation on the capacity
of the source to emit a pollutant, including air
pollution control equipment and restrictions on
hours of operation or on the type or amount of
material combusted, stored, or processed, shall be
treated as part of its design if the limitation or the
effect it would have on emissions is described or
contained as a condition in the federally enforce-
able permit. Secondary emissions do not count in
determining potential emissions of a stationary
source. Fugitive emissions count, to the extent
quantifiable, in determining the jxjtential emissions
only in these cases:
(a) petroleum refineries;
fb) chemical process plants; and
(c) fjetroleum storage and transfer units with a total
storage capacity exceeding 300,000 barrels.
(16) "Prime coat" means the first film of coating
applied to a surface to protect it or to prepare it to
receive subsequent coatings.
(17) "Reasonably available control technology" (also
denoted as RACT) means the lowest emission
limit which a particular source is capable of
meeting by the application of control technology
that is reasonably available considering technologi-
cal and economic feasibility. It may require
technology which has been applied to similar, but
not necessarily identical, source categories.
(18) "Reid vapor pressure" means the absolute vapor
pressure of volatile crude oil and volatile
nonviscous petroleum liquids except liquefied
petroleum gases as determined by American
Society for Testing and Materials, Part 17, 1973,
D-323-72 (reapproved 1977).
(19) "Shutdown" means the cessation of operation of a
source or a part thereof or emission control
equipment.
(20) "Solvent" means organic materials which are
hquid at standard conditions and which are used as
dissolvers, viscosity reducers, or cleaning agents.
(21) "Standard conditions" means a temperature of
68°F and pressure of 29.92 inches of mercury.
(22) "Startup" means the setting in op>eration of a
source or emission control equipment.
(23) "Substrate" means the surface to which a coating
is applied.
(24) "Topcoat" means the final films of coating applied
in a multiple or single coat op>eration.
(25) "True vapor pressure" means the equilibrium
partial pressure exerted by a petroleum liquid as
determined in accordance with methods described
in American Petroleum Institute Bulletin 2517,
"Evaporation Loss from Floating Roof Tanks,"
1962.
(26) "Vap)or collection system" means a vapor transjxsrt
system which uses direct displacement by the
liquid loaded to force vapors from the tank into a
vajjor control system.
(27) "Vapor control system" means a system which
prevents release to the atmosphere of at least 90
percent by weight of organic compounds in the
vapors displaced from a tank during the transfer of
gasoline.
(28) "Volatile organic compound" (also denoted as
VOC) means any compound of carbon whose
volatile content can be determined by the proce-
dure described in Rules .0913 or .0939 of this
Section excluding: excluding any compound that is
listed under 40 C¥R 51.100(s) as having been
determined to have negligible photochemical
reactivity.
carbon monoxide.
oarbon dioxid e ,
oarbonio aoid,
metallic carbides or carbonatoa,
ammonium carbonate.
1525
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
mothano,
ethan e .
(b) triohlorofluoromethono (ohlorofluorooarbon 11),
(chlorofluorocarbon
(*>■
©-
dichlorodi fluoromothano
ohiorodifluorom e than e (ohlorofluorooarbon 23),
(k) trifluoromothon e (fluorooarbon 23),
(1) trichlorotrifluoroothano (chlorofluorocarbon
(«)-
diohlorototrafluoro e thon e
(ohlorofluorooarbon
-H4)t
(a) ohloropontafluoroothano (ohlorofluorooarbon
1,1,1 triohloroothon e (m e thyl ohloroform).
diohloromothan e (mothylon e ohlorid e ),
{e^ dichlorotrifluoroothano (hydrochlorofluorocarbon
433>T
(f) totrafluoroothan e (hydrofluorooarbon 13ia),
(e) d i ohlorofluoro e thano (hydroohlorofluorooarbon
1 4 1b),
(4) chlorodifluoroothono (hydrochlorofluorocarbon
l'12b),
ftt) 2 ohloro — 1,1,1,2 totrafluoro e than e
(hydrochlorofluorocarbon 12 4 ),
(v) pontafluoroothono (hydrofluorooarbon 125),
(w) 1,1,2,2 totrafluoro e than e (hydrofluorooarbon
\2\)
(?t) 1,1,1 trifluoroothano (hydrofluorooarbon 1 4 3a),
(y) 1,1 di fluorooarbon (hydrofluorooarbon — 152a),
(*) porfluorooarbon oompoundo that fall into th e s e
olasooo:
(i) — cyclic, branched, or linear oomplotoly fluori
nated alkan e o;
(ii) — oyolio, branch e d, or lin e ar oomplet e ly fluori
nated ethers with no unaaturationa;
(iii) — cyclic, branchod, or linear oomplotoly fluori
nat e d t e rt i ar>f amin e o with no uneaturationo;
(iv) — s ulfur containing porfluorocarbons with no
unsaturation s and with s ulfur bonda only to
oarbon and fluorin e .
Statutory Authority G.S. 143-215. 3(a)(1).
.0917 AUTOMOBILE AND LIGHT-DUTY
TRUCK MANUFACTURING
(a) For the purpose of this Regulation Rule, the following
definitions apply:
(1) "Application area" means the area where the
coating is applied by dipping or spraying.
(2) "Manufacturing plant" means a facility where
auto body parts are manufactured and/or or
finished for eventual inclusion into a finished
product ready for sale to vehicle dealers.
Customizers, body shops and other repainters
are not part of this definition.
(3) "Automobile" means all passenger cars or
p>assenger car derivatives capable of seating 12
or fewer passengers.
(4) "Light-duty trucks" means any motor vehicles
rated at 8,500 pounds gross weight or less which
are designed primarily for purpose of transporta-
tion or are derivatives of such vehicles except
automobiles.
(b) This Regulation Rule applies to the application
area(s), flashoff area(s), and oven(s), of automotive and
light-duty truck manufacturing plants involved in prime,
topcoat and final repair coating operations.
(c) With the exception stated in Paragraph (d) of this
Rule, emissions of volatile organic compounds from any
automotive or light-duty truck manufacturing plant coating
line subject to this Regulation Rule shall not exceed:
(1) 1.4 pounds of volatile organic compounds per
gallon of solids delivered to the applicator from
prime application, flashoff area, and oven opera-
tions;
(2) 4.5 pounds of volatile organic compounds per
gallon of solids delivered to the applicator from
topcoat and surface application, flashoff area,
and oven operation;
(3) 13.8 pounds of volatile organic compounds per
gallon of solids delivered to the applicator from
final repair application, flashoff area, and oven
operation.
(d) Any source which has chosen to control emissions of
volatile organic compounds under Rule .0518(e) of this
Subchapter and which has installed air pollution control
equipment in accordance with an air quality permit in order
to comply with this Rule before December 1, 1989, may
comply with the limits contained in this Paragraph instead
of those contained in Paragraph (c) of this Rule. Emissions
of volatile organic compounds from any automotive or light-
duty truck manufacturing plant coating line subject to this
R e gulation Rule shall not exceed:
(1) 1.2 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to the applicator from
prime application, flashoff area, and oven opera-
tions;
(2) 2.8 pounds of volatile organic compounds per
gallon of coating, daily weighted average,
excluding water and exempt compounds, deliv-
ered to the applicator from topcoat and surface
application, flashoff area, and oven operation;
(3) 4.8 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to the applicator from
final repair application, flashoff area, and oven
operation.
Statutory Authority G. S.
143-215. 107(a)(5).
143-215. 3(a)(1):
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NORTH CAROLINA REGISTER
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PROPOSED RULES
.0918 CAN COATING
(a) For the purpose of this Rogu l ation Rule , the following
definitions apply:
(1) "End sealing compound" means a synthetic
rubber compound which is coated onto can ends
and which functions as a gasket when the end is
assembled on the can.
(2) "Exterior base coating" means a coating applied
to the exterior of a can to provide exterior
protection to the metal and to provide back-
ground for the lithographic or printing operation.
(3) "Interior base coating" means a coating applied
by roller coater or spray to the interior of a can
to provide a protective lining between the can
metal and product.
(4) "Interior body spray" means a coating sprayed
on the interior of the can body to provide a
protective film between the product and the can.
(5) "Overvamish" means a coating applied directly
over ink to reduce the coefficient of friction, to
provide gloss, and to protect the finish against
abrasion and corrosion.
(6) "Three-piece can side-seam spray" means a
coating sprayed on the exterior and interior of a
welded, cemented, or soldered seam to protect
the exposed metal.
(7) "Two-piece can exterior end coating" means a
coating applied by roller coating or spraying to
the exterior end of a can to provide protection to
the metal.
(b) This Regulation Rule applies to coating applicator(s)
and oven(s) of sheet, can, or end coating lines involved in
sheet basecoat (exterior and interior) and overvamish; two-
piece can interior body spray; two-piece can exterior end
(spray or roll coat); three-piece can side-seam spray and end
sealing compound operations.
(c) With the exception stated in Paragraph (d) of this
Rule, emissions of volatile organic compounds from any can
coating line subject to this R e gu l ation Rule shall not exceed:
(1) 4.5 pounds of volatile organic compounds per
gallon of solids delivered to the coating applica-
tor from sheet basecoat (exterior and interior)
and overvamish or two-piece can exterior
(basecoat and overvamish) operations;
(2) 9.8 pounds of volatile organic compounds per
gallon of solids delivered to the coating applica-
tor from two and three-piece can interior body
spray and two-piece can exterior end (spray or
roll coat) operations;
(3) 21.8 pounds of volatile organic compounds per
gallon of solids delivered to the coating applica-
tor from a three-piece applicator from a three-
piece can side-seam spray operations;
(4) 7.4 pounds of volatile organic compounds per
gallon of solids delivered to the coating applica-
tor from end sealing compound operations.
(d) Any source which has chosen to control emissions of
volatile organic compounds under Rule .0518(e) of this
Subchapter and which has installed air pollution control
equipment in accordance with an air quality permit in order
to comply with this Rule before December 1, 1989, may
comply with the limits contained in this Paragraph instead
of those contained in Paragraph (c) of this Rule. Emissions
of volatile organic compounds from any can coating line
subject to this Regulation Rule shall not exceed:
(1) 2.8 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to the coating applicator
from sheet basecoat (exterior and interior) and
overvamish or two-piece can exterior (basecoat
and overvamish) operations;
(2) 4.2 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to the coating applicator
from two and three-piece can interior body spray
and two-piece can exterior end (spray or roll
coat) operations;
(3) 5.5 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to the coating applicator
from a three-piece applicator from a three-piece
can side-seam spray operations;
(4) 3.7 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to the coating applicator
from end sealing compound operations.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0919 COIL COATING
(a) For the purpose of this R e gulation Rule , the following
definitions apply:
(1) "Coil coating" means the coating of any flat
metal sheet or strip that comes in rolls or coils.
(2) "Quench area" means a chamber where the hot
metal exiting the oven is cooled by either a
spray of water or a blast of air followed by
water cooling.
(b) This R e gulation Rule applies to the coating applica-
tor(s), oven(s), and quench area(s) of coil coating lines
involved in prime and top coat or single coat operations.
(c) With the exception stated in Paragraph (d) of this
Rule, emissions of volatile organic compounds from any coil
coating line subject to this Rogulation Rule shall not exceed
4.0 pounds of volatile organic compounds per gallon of
solids delivered to the coating application applicator from
prime and topcoat or single coat operations.
(d) Any source which has chosen to control emissions of
volatile organic compounds under Rule .0518(e) of this
Subchapter and which has installed air pollution control
equipment in accordance with an air quality permit in order
to comply with this Rule before December 1, 1989, may
comply with the limits contained in this Paragraph instead
1527
NORTH CAROLINA REGISTER
November 1, 1995
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PROPOSED RULES
of those contained in Paragraph (c) of this Rule. Emissions
of volatile organic compounds from any coil coating line
subject to this Regulation Rule shall not exceed 2.6 pounds
of volatile organic compounds per gallon of coating,
excluding water and exempt compounds, delivered to the
coating applicator from prime and topcoat or single coat
operations.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0920 PAPER COATING
(a) For the purpose of this Regulation Rule , the following
definitions apply:
(1) "Knife coating" means the application of a
coating material to a substrate by means of
drawing the substrate beneath a knife that
spreads the coating evenly over the full width of
the substrate.
(2) "Paper coating" means decorative, protective, or
functional coatings put on paper and pressure
sensitive tapes regardless of substrate; the coat-
ings are distributed uniformly across the web.
Related web coating processes on plastic film
and decorative coatings on metal foil are in-
cluded in this definition. Saturation operations
are included in this defmition.
(3) "Roll coating" means the application of a coating
material to a substrate by means of hard rubber
or steel rolls.
(4) "Rotogravure coating" means the application of
a coating material to a substrate by means of a
roll coating technique in which the substance to
be applied is temporarily retained in etchings on
the coating roll. The coating material is picked
up in these recessed areas and is transferred to
the substrate.
(b) This Regulation Rule applies to roll, knife or rotogra-
vure coater(s) and drying oven(s) of paper coating lines.
(c) This Regulation doos not apply to:
(4) the graphic arts or printing, or
(3) proo e ss e s in which th e ooating is not distribut e d
uniformly aoroso th e w e b, or
^ procoosos whoro both coating and printing are
porformod on tho same machine.
(d) £c) With the exception stated in Paragraph (e) {d} of
this Rule, emissions of volatile organic compounds from any
paper coating line subject to this Regulation Rule shall not
exceed 4.8 pounds of volatile organic compounds per gallon
of solids delivered to the coating applicator from a paper
coating line.
(^ £d) Any source which has chosen to control emissions
of volatile organic compounds under Rule .0518 (e) of this
Subchapter and which has installed air pollution control
equipment in accordance with an air quality permit in order
to comply with this Rule before December 1, 1989, may
comply with the limits contained in this Paragraph instead
of those contained in Paragraph £ci(d) of this Rule. Emis-
sions of volatile organic compounds from any pa[)er coating
line subject to this R e gulation Rule shall not exceed 2.9
p>ounds of volatile organic compounds per gallon of coating,
excluding water and exempt compounds, delivered to the
coating applicator from a paper coating line.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0921 FABRIC AND VINYL COATING
(a) For the purpose of this Regulation Rule , the following
definitions apply:
(1) "Fabric coating" means applying protective or
functional coatings to a textile substance with a
knife, roll, rotogravure, rotary screen, or flat
screen coater to impart properties that are not
initially present, such as strength, stability,
water or acid repellency, or appearance. Print-
ing on textile fabric for decorative or other
purposes is not part of this defmition. Satura-
tion operations are included in this definition.
(2) "Knife coating" means the application of a
coating material to a substrate by means of
drawing the substrate beneath a knife which
spreads the coating evenly over the full width of
the substrate.
(3) "Roll coating" means the application of a coating
material to a substrate by means of hard rubber
or steel rolls.
(4) "Rotogravure coating" means the application of
a coating material to a substrate by means of a
roll coating technique in which the pattern to be
applied is etched on the coating roll. The
coating material is picked up in these recessed
areas and is transferred to the substrate.
(5) "Vinyl coating" means applymg a functional,
decorative, or protective tof>coat, or printing on
vinyl coated fabric or vinyl sheets.
(6) "Rotary screen or flat screen coating" means the
application of a coating material to a substrate
by means of masking the surface and applying a
color or finish using a screen either in flat form
or rotary form.
(b) This Regulation Rule applies to roll, knife, rotogra-
vure, rotary screen, or flat screen coater(s) and drying
oven(s) of fabric and vinyl coating lines.
(c) With the exception stated in Paragraph (d) of this
Rule, emissions of volatile organic compounds from any
fabric coating line or vinyl coating line subject to this
R e gulation Rule shall not exceed:
(1) 4.8 pounds of volatile organic compounds per
gallon of solids delivered to the coating applica-
tor from a fabric coating line;
(2) 7.9 pounds of volatile organic compounds per
gallon of solids delivered to the coating applica-
tor from a vinyl coating line.
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NORTH CAROLINA REGISTER
November 1, 1995
1528
PROPOSED RULES
(d) Any source which has chosen to control emissions of
volatile organic compounds under Rule .0518(e) of this
Subchapter and which has installed air pjollution control
equipment in accordance with an air quality permit in order
to comply with this Rule before December 1, 1989, may
comply with the limits contained in this Paragraph instead
of those contained in Paragraph (c) of this Rule. Emissions
of volatile organic compounds from any fabric coating line
or vinyl coating line subject to this Regulation Rule shall not
exceed:
(1) 2.9 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to the coating applicator
from a fabric coating line;
(2) 3.8 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to the coating applicator
from a vinyl coating line.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
Mil METAL FURNITURE COATING
(a) For the purpose of this Regulation Rule, the following
defmitions apply:
(1) "Application area" means the area where the
coating is applied by spraying, dipping, or
flowcoating techniques.
(2) "Metal furniture coating" means the surface
coating of any furniture made of metal or any
metal part which will be assembled with other
metal, wood, fabric, plastic, or glass parts to
form a furniture piece.
(b) This R e gulation Rule applies to the application
area(s), flashoff area(s), and oven(s) of metal furniture
coating lines involved in prime and topcoat or single coating
operations.
(c) With the exception stated in Paragraph (d) of this
Rule, emissions of volatile organic compounds from any
metal furniture coating line subject to this Regulation Rule
shall not exceed 5. 1 pounds of \'olatile organic compounds
per gallon of solids delivered to the coating applicator from
prime and topcoat or single coat operations.
(d) Any source which has chosen to control emissions of
volatile organic compounds under Rule .0518(e) of this
Subchapter and which has installed air pollution control
equipment in accordance with an air quality permit in order
to comply with this Rule before December 1, 1989, may
comply with the limits contained in this Paragraph instead
of those contained in Paragraph (c) of this Rule. Emissions
of volatile organic compounds from any metal furniture
coating line subject to this Regulation Rule shall not exceed
3.0 pounds of volatile organic compounds per gallon of
coating, excluding water and exempt compounds, delivered
to the coating applicator from prime and topcoat or single
coat operations.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0923
SURFACE COATING OF LARGE
APPLIANCES
(a) For the purpose of this R e gulation Rule , the following
defmitions apply:
(1) "Application area" means the area where the
coating is applied by spraying, dipping, or
flowcoating techniques.
(2) "Single coat" means a single film of coating
applied directly to the metal substrate omitting
the primer application.
(3) "Large appliances" means doors, cases, lids,
panels, and interior support parts of residential
and commercial washers, dryers, ranges, refrig-
erators, freezers, water heaters, dishwashers,
trash compactors, air conditioners, and other
similar products.
(b) This Regulation Rule applies to application area(s),
flashoff area(s), and oven(s) of large appliance coating lines
involved in prime, single, or topcoat coating operations.
(e) — Thio R e gulation do e s not apply to th e uo e of quiok
drying lacquers for repair of scratchca and nicks which
occur during assembly, if the volume of coating doos not
oxoood on e quart in any eight hour p e riod.
(4) {£} With the exception stated in Paragraph (e) £d} of
this Rule, emissions of volatile organic compounds from any
large appliance coating line subject to this Regulation Rule
shall not exceed 4.5 pounds of volatile organic compounds
per gallon of solids delivered to the coating applicator from
prime, single, or topcoat coating operations.
(e) (d) Any source which has chosen to control emissions
of volatile organic compounds under Rule .0518 (e) of this
Subchapter and which has installed air pollution control
equipment in accordance with an air quality permit in order
to comply with this Rule before December 1, 1989, may
comply with the limits contained in this Paragraph instead
of those contained in Paragraph fd) £c} of this Rule.
Emissions of volatile organic compounds from any large
appliance coating line subject to this R e gulation Rule shall
not exceed 2.8 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt compounds,
delivered to the coating applicator from prime, single, or
topcoat coating operations.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0924 MAGNTT WIRE COATING
(a) For the purpxjse of this R e gulation Rule , "magnet wire
coating" means the process of applying a coating of electri-
cally insulating varnish or enamel to aluminum or copper
wire for use in electrical machinery.
(b) This R e gulation Rule appUes to the oven(s) of magnet
wire coating of>erations.
(c) With the exception stated in Paragraph (d) of this
1529
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
Rule, emissions of volatile organic compounds from any
magnet wire coating oven subject to this Regulation Rule
shall not exceed 2.2 pounds of volatile organic compounds
per gallon of soUds delivered to the coating applicator from
magnet wire coating operations.
(d) Any source which has chosen to control emissions of
volatile organic compounds under Rule .0518(e) of this
Subchapter and which has installed air pollution control
equipment in accordance with an air quality permit in order
to comply with this Rule before December 1, 1989, may
comply with the limits contained in this Paragraph instead
of those contained in Paragraph (c) of this Rule. Emissions
of volatile organic compounds from any magnet wire
coating oven subject to this R e gulation Rule shall not exceed
1.7 pounds of volatile organic compounds per gallon of
coating, excluding water and exempt comjX)unds, delivered
to the coating applicator from magnet wire coating opera-
tions.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0926 BULK GASOLINE PLANTS
(a) For the purfxjse of this Rule, the following defmitions
apply:
(1) "Average daily throughput" means annual
throughput of gasoline divided by 312 days per
year.
(2) "Bottom filling" means the filling of a tank truck
or stationary storage tank through an opening
that is flush with the tank bottom.
(3) "Bulk gasoline plant" means a gasoline storage
and distribution facility which has an average
daily throughput of less than 20,000 gallons of
gasoline and which usually receives gasoline
from bulk terminals by trailer transport, stores
it in tanks, and subsequently dispenses it via
account trucks to local farms, businesses, and
service stations.
(4) "Bulk gasoline terminal" means a gasoline
storage facility which usually receives gasoline
from refineries primarily by pipeline, ship, or
barge; and delivers gasoline to bulk gasoline
plants or to commercial or retail accounts pri-
marily by tank truck; and has an average daily
throughput of more than 20,000 gallons of
gasoline.
(5) "Gasoline" means any petroleum distillate having
a Reid vapor pressure of four psia or greater.
(6) "Incoming vapor balance system" means a
combination of pip>es or hoses which create a
closed system between the vapor spaces of an
unloading tank truck or trailer and a receiving
stationary storage tank such that vapors dis-
placed fix)m the receiving stationary storage tank
are transferred to the tank truck or trailer being
unloaded.
(7) "Outgoing vapor balance system" means a
combination of pipes or hoses which create a
closed system between the vapor spaces of an
unloading stationary storage tank and a receiving
tank truck or trailer such that vapors displaced
from the receiving tank truck or trailer are
transferred to the stationary storage tank being
unloaded.
(8) "Splash filling" means the filling of a tank truck
or stationary storage tank through a pipe or hose
whose discharge opening is above the surface
level of the liquid in the tank being filled.
(9) "Submerged filling" means the filling of a tank
truck or stationary tank through a pipe or hose
whose discharge opening is entirely submerged
when the pipe normally used to withdraw liquid
from the tank can no longer withdraw any
liquid, or whose discharge opening is entirely
submerged when the liquid level is six inches
above the bottom of the tank.
(b) This Rule applies to the unloading, loading, and
storage facilities of all bulk gasoline plants and of all tank
trucks or trailers delivering or receiving gasoline at bulk
gasoline plants except stationary storage tanks with capaci-
ties less than 528 gallons.
(c) The owner or operator of a bulk gasoline plant shall
not transfer gasoline to any stationary storage tanks after
May 1, 1993, unless the unloading tank truck or trailer and
the receiving stationary storage tank are equipped with an
incoming vapor balance system as described in Paragraph
(g) £1} of this Rule and the receiving stationary storage tank
is equipped with a fill line whose discharge opening is flush
with the bottom of the tank.
(d) TTie owner or ofjerator of a bulk gasoline plant with
an average daily gasoline throughput of 4,000 gallons or
more shall not load tank trucks or trailers at such plant after
May 1, 1993, unless the unloading stationary storage tank
and the receiving tank truck or trailer are equipped with an
outgoing vapor balance system as described in Paragraph (i)
of this Rule and the receiving tank truck or trailer is
equipped for bottom filling.
(e) The owner or operator of a bulk gasoline plant with
an average daily throughput of more than 2,500 gallons but
less than 4,000 gallons located in an area with a housing
density exceeding sjjecified limits as described in this
Paragraph shall not load any tank truck or trailer at such
bulk gasoline plant after November 1, 1996, unless the
unloading stationary storage tank and receiving tank truck or
trailer are equipped with an outgoing vapor balance system
as described in Paragraph (i) of this Rule and the receiving
tank truck or trailer is equipp>ed for bottom filling. In the
counties of Alamance, Buncombe, Cabarrus, Catawba,
Cumberland, Davidson, Durham, Forsyth, Gaston,
Guilford, Mecklenburg, New Hanover, Orange, Rowan, and
Wake, the specified limit on housing density is 50 resi-
dences in a square one mile on a side with the square
centered on the loading rack at the bulk gasoline plant and
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1530
PROPOSED RULES
with one side oriented Ln a true North-South direction. In
all other counties the specified limit on housing density is
100 residences per square mile. The housing density shall
be determined by counting the number of residences using
aerial photographs or other suitable methods acceptable to
the Director.
(f) The owner or operator of a bulk gasoline plant not
subject to the outgoing vapor balance system requirements
of Paragraph (d) or (e) of this Rule shall not load trucks or
trailers at such plants unless:
(1) Equipment is available at the bulk gasoline plant
to provide for submerge filling of each tank
truck or trailer; or
(2) Each receiving tank truck or trailer is equipped
for bottom filling.
(g) For a gasoline bulk plants located in nonattainment
area for ozone, once the average daily throughput of
gasoline at the bulk gasoline plant reaches or exceeds the
applicability threshold in Paragraph (d) or (e) of this Rule
or if Paragraph (d) or (e) is currently applicable to the bulk
gasoline plant, the bulk gasoline plant shall continue to
comply with the outgoing vapor balance system require-
ments of Paragraph (d) or (e) of this Rule, as is applicable,
even though the average daily gasoline throughput falls
below the threshold contained in Paragraph (d) or (e) of this
Rule.
(h) The owner or operator of a bulk gasoline plant, tank
truck or trailer that is required to be equipped with a vapor
balance system pursuant to Paragraphs (c), (d), or (e) of this
Rule shall not transfer gasoline between tank truck or trailer
and stationary storage tank unless:
(1) The vapor balance system is in good working
order and is connected and operating;
(2) Tank truck or trailer hatches are closed at all
times during loading and unloading operations;
and
(3) The tank truck's or trailer's pressure/vacuum
relief valves and hatch covers and the truck
tanks or storage tanks or associated vapor and
liquid lines are vapor tight during loading or
unloading.
(i) Vapor balance systems required under Paragraphs (c),
(d), and (e) of this Rule shall consist of the following major
components:
(1) a vapor space connection on the stationary
storage tank equipped with fittings which are
vapor tight and will be automatically and imme-
diately closed upon disconnection so as to pre-
vent release of organic material;
(2) a connecting pipe or hose equipped with fittings
which are vapor tight and will be automatically
and immediately closed upon disconnection so as
to prevent release of organic material; and
(3) a vapor space connection on the tank truck or
trailer equipped with fittings which are vapor
tight and will be automatically and immediately
closed upon disconnection so as to prevent
release of organic material.
(j) The owner or operator of a bulk gasoline plant shall
paint all tanks used for gasoline storage white or silver at
the next scheduled painting or before November 1, 2002,
whichever is sooner.
(k) The pressure relief valves on tank trucks or trailers
loading or unloading at bulk gasoline plants shall be set to
release at the highest possible pressure (in accordance with
state or local fire codes or the National Fire Prevention
Association guidelines). The pressure relief valves on
stationary storage tanks shall be set at 0.5 psi for storage
tanks placed in service on or after November 1, 1992, and
0.25 psi for storage tanks existing before November 1,
1992.
(1) No owner or operator of a bulk gasoline plant may
permit gasoline to be spilled, discarded in sewers, stored in
opwn containers, or handled in any other inanner that would
result in evaporation.
(m) The owner or operator of a bulk gasoline plant shall
observe loading and unloading operations and shall discon-
tinue the transfer of gasoline:
(1) if any liquid leaks are observed, or
(2) if any vapor leaks are observed where a vapor
balance system is required under Paragraphs (c),
(d), or (e) of this Rule.
(n) The owner or operator of a bulk gasoline plant shall
not load, or allow to be loaded, gasoline into anv truck tank
or trailer unless the truck tank or trailer has been certified
leak tight in accordance with Rule .0933 of this Section
within the last 12 months.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0927 BULK GASOLINE TERMINALS
(a) For the purpose of this Rule, the following defmitions
apply:
(1) "Bulk gasoline terminal" means:
(A) breakout tanks of an interstate oil pipeline
facility; or
(B) a gasoline storage facility which usually re-
ceives gasoline from refmeries primarily by
pipeline, ship, or barge; and delivers gasoline
to bulk gasoline plants or to commercial or
retail accounts primarily by tank truck; and has
an average daily throughput of more than
20,000 gallons of gasoline.
(2) "Gasoline" means a petroleum distillate having
a Reid vapor pressure of four psia or greater.
(3) "Breakout tank" means a tank used to:
(A) relieve surges in a hazardous liquid pipeline
system, or
(B) receive and store hazardous hquids transported
by pipeline for reinjection and continued
transport by pipeline.
(b) Tliis Rule applies to bulk gasoline terminals and the
appurtenant equipment necessary to load the tank truck or
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NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
trailer compartments.
(c) Gasoline shall not be loaded into any tank trucks or
trailers from any bulk gasoline terminal unless:
(1) The bulk gasoline terminal is equippted with a
vajxsr control system that prevents the emissions
of volatile organic compounds from exceeding:
(A) 80 milligrams per liter (4.7 grains per gallon)
of gasoline loaded for control systems installed
before December 1, 1992 imtil December 1,
1995 or the next major modification, which-
ever occurs first; after December 1, 1995 or at
the next major modification, these control
systems shall prevent emissions of volatile
organic compounds from exceeding 35 milli-
grams per liter of gasoline loaded;
(B) 35 milligrams per liter for control systems
installed after December 1, 1992; and that is
properly installed, in good working order, and
in operation. The owner or operator shall
obtain from the manufacturer and maintain in
his records a pre-installation certification
stating the vapor control efficiency of the
system in use;
(2) Displaced vapors and gases are vented only to
the vapor control system or to a flare;
(3) A means is provided to prevent liquid drainage
from the loading device when it is not in use or
to accomplish complete drainage before the
loading device is disconnected; and
(4) All loading and vapor lines are equipped with
fittings which make vapor-tight connections and
which are automatically and immediately closed
upon disconnection.
(d) Sources regulated by Paragraph (b) of this Rule shall
not:
(1) allow gasoline to be discarded in sewers or
stored in open containers or handled in any
manner that would result in evaporation, or
(2) allow the pressure in the vapor collection system
to exceed the tank truck or trailer pressure relief
settings.
(e) The owner or operator of a bulk gasoline terminal
shall paint all tanks used for gasoline storage white or silver
at the next scheduled painting or by December 1, 2002,
whichever occurs first.
(f) The owner or operator of a bulk gasoline terminal
shall install on each external floating roof tank with an
inside diameter of 100 feet or less used to store gasoline a
self-supporting roof, such as a geodesic dome, at the next
time that the tank is taken out of service or by December 1 ,
2002, whichever occurs first.
(g) The following equipment shall be required on all new
tanks storing gasoline at a bulk gasoline terminal when put
into service and shall be required on all existing tanks
storing gasoline at a bulk gasoline terminal by December 1 ,
1995:
(1) rim-mounted secondaiy seals on all external and
internal floating roof tanks,
(2) welded seams where possible, otherwise gaskets
on roof and deck fittings, and
(3) floats in the slotted guide poles with a gasket
around the cover of the poles.
(h) If, upon facility or operational modification of a bulk
gasoline terminal that existed before December 1, 1992, an
increase in benzene emissions results such that:
(1) emissions of volatile organic compounds in-
crease by more than 25 tons cumulative at any
time during the five years following modifica-
tions; and
(2) annual emissions of benzene from the cluster
where the bulk gasoline terminal is located
(including the pipeline and marketing terminals
served by the pipeline) exceed benzene emis-
sions from that cluster based upon calendar year
1991 gasoline throughput and application of the
requirements of this Subchapter, the annual
increase in benzene emissions due to the modifi-
cation shall be offset within the cluster by reduc-
tion in benzene emissions beyond that otherwise
achieved as a result of compliance with this
Rule, in the ratio of at least 1.3 to 1.
(i) The owner or operators of a bulk gasoline terminal
that has been permitted before December 1, 1992, to emit
toxic air pollutants under 15A NCAC 2H .0610 to comply
with Section . 1 1(X) of this Subchapter shall continue to
adhere to all terms and conditions of the permit issued under
15 A NCAC 2H .0610 and to bring the terminal into
comphance with Section . 1 100 of this Subchapter in accor-
dance with the terms and conditions of the permit, in which
case the bulk gasoline terminal shall continue to need a
permit to emit toxic air pollutants and shall be exempted
from Paragraphs (e) through (h) of this Rule.
(j) Within one year after December 1, 1996, the Director
shall determine the incremental ambient benzene levels at
the fence line of any bulk gasoline terminal cluster resulting
from benzene emissions from such cluster and shall report
his findings to the Commission.
(k) The owner or operator of any bulk gasoline terminal
subject to this Rule that begins construction or is in opera-
tion before December 1, 1992, shall submit:
(1) documentation that the control system meets the
limit of 35 milligrams pier liter required under
Paragraph (c) of this Rule and that the require-
ments of Paragraph (g) of this Rule have been
met, or
(2) a compliance schedule by which the bulk gaso-
line terminal shall come into compliance by
December 1, 1995, with Paragraphs (c) or (g) of
this Rule.
(I) The owner or operator of a bulk gasoline terminal
shall not load, or allow to be loaded, gasoline into anv truck
tank or trailer unless the truck tank or trailer has been
certified leak tight in accordance with Rule .0933 of this
Section within the last 12 months.
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PROPOSED RULES
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0928 GASOLINE SERVICE STATIONS STAGE I
(a) Definitions. For the purpose of this Rule, the
following definitions apply:
(1) "Gasoline" means a petroleum distillate having
a Reid vapor pressure of four psia or greater.
(2) "Delivery vessel" means tank trucks or trailers
equipped with a storage tank and used for the
transport of gasoline from sources or supply to
stationary storage tanks of gasoline dispensing
facilities.
(3) "Submerged fill pipe" means any fill pipe with
a discharge opening which is entirely submerged
when the pipe normally used to withdraw liquid
from the tank can no longer withdraw any
liquid, or which is entirely submerged when the
level of the liquid is:
(A) six inches above the bottom of the tank if the
tank does not have a vapor recovery adaptor,
or
(B) 12 inches above the bottom of the tank if the
tank has a vapor recovery adaptor.
If the opening of the submerged fill pipe is cut
at a slant, the distance is measured from the top
of the slanted cut to the bottom of the tank.
(4) "Owner" means any person who has legal or
equitable title to the gasoline storage tank at a
facility.
(5) "Operator" means any person who leases, oper-
ates, controls, or supervises a facility at which
gasoline is dispensed.
(6) "Gasoline dispensing facility" means any site
where gasoline is dispensed to motor vehicle
gasoline tanks from stationary storage tanks.
(7) "Gasoline service station" means any gasoline
dispensing facility where gasoline is sold to the
motoring public from stationary storage tanks.
(8) "Throughput" means the amount of gasoline
dispensed at a facility during a calendar month
after November 15, 1990.
(9) "Line" means any pipe suitable for transferring
fluids gasoline .
(10) "Dual point system" means the delivery of the
product to the stationary storage tank and the
recovery of vapors from the stationary storage
tanks tank occurs occur through two separate
openings in the storage tank and two separate
hoses between the tank truck and the stationary
storage tank.
(11) "Coaxial system" means the delivery of the
product and recovery of vapors occur through a
single coaxial fill tube, which is a tube within a
tube. Product is delivered through the inner
tube, and vapor is recovered through the annular
space between the walls of the inner tube and
outer tube.
(12) "Poppeted vapor recovery adaptor" means a
vapor recovery adaptor that automatically and
immediately closes itself when the vapor return
line is disconnected and maintains a tight seal
when the vapor return line is not connected.
(13) "Stationary storage tank" means a gasoline
storage container which is a permanent fixture.
(b) Applicability. This Rule applies to all gasoline
dispensing facilities and gasoline service stations and to
delivery vessels deUvering gasoline to a gasoline dispensing
facility or gasoline service station.
(c) Exemptions. This Rule does not apply to:
(1) transfers made to storage tanks ef at gasoline
dispensing facilities or gasoline service stations
equipjDed with floating roofs or their equivalent;
(2) stationary tanks with a capacity of not more than
2,000 gallons which are in place before July 1,
1979, if the tanks are equipped with a permanent
or portable submerged fill pipe;
(3) stationary storage tanks with a capacity of not
more than 550 gallons which are installed after
June 30, 1979, if tanks are equipped with a
p>ermanent or portable (portable) submerged fill
pipe;
(4) stationary storage tanks with a capacity of not
more than 2000 gallons located on a farm or a
residence and used to store gasoline for farm
equipment or residential use if gasoline is deliv-
ered to the tank through a permanent or portable
(portabl e ) submerged fill pipe except that this
exemption does not apply in ozone non-attain-
ment areas;
(5) stationary storage tanks at a gasoline dispensing
facility or gasoline service stationo station where
the combined armual throughput of gasoline at
the facility or station does not exceed 50,000
gallons, if the tanks are piermanently equipped
with submerged fill pipes;
(6) any tanks used exclusively to test the fuel dis-
pensing meters.
(d) With exceptions stated in Paragraph (c) of this Rule,
gasoline shall not be transferred from any delivery vessel
into any stationary storage tank unless:
(1) The tank is equipped with a submerged fill pipe,
and the vapors displaced from the storage tank
during filling are controlled by a vapor control
system as described in Paragraph (e) of this
Rule;
(2) The vapor control system is in good working
order and is connected and operating with a
vapor tight connection;
(3) The vapor control system is properly maintained
and all damaged or malfunctioning components
or elements of design are repaired, replaced or
modified;
(4) Gauges, meters, or other specified testing de-
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NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
vices are maintained in proper working order;
(5) The delivery vessel and vapor collection system
complies with Rule .0932 of this Section; and
(6) The following records, as a minimum, are kept
in accordance with Rule .0903 of this Section:
(A) the scheduled date for maintenance or the date
that a malfunction was detected;
(B) the date the maintenance was performed or the
malfunction corrected; and
(C) the component or element of design of the
control system repaired, replaced, or modified.
(e) The vapor control system required by Paragraph (d)
of this Rule shall include one or more of the following:
(1) a vapor-tight line from the storage tank to the
delivery vessel and:
(A) for a coaxial vapor recovery system, either a
f)oppeted or unpoppeted vapor recovery adap-
tor;
(B) for a dual point vapor recovery system,
poppeted vapor recovery adaptor; or
(2) a refrigeration-condensation system or equivalent
designed to recover at least 90 percent by weight
of the organic compounds in the displaced
vapor.
(f) If an unpoppeted vapor recovery adaptor is used
pursuant to Part (e)(1)(A) of this Rule, the tank liquid fill
connection shall remain covered either with a vapwr-tight
cap or a vapor return line except when the vapor return line
is being connected or disconnected.
(g) If an unpoppeted vapor recovery adaptor is used
pursuant to Part (e)(1)(A) of this Rule, the unpoppeted
vapor recovery adaptor shall be replaced with a poppeted
vapor recovery adaptor when the tank is replaced or is
removed and upgraded.
(h) Where vapor lines from the storage tanks are mani-
folded, poppeted vapxjr recovery adapters shall be used. No
more than one tank is to be loaded at a time if the manifold
vapxDr lines are size 2 '/i inches and smaller. If the manifold
vapor lines are 3 inches and larger, then two tanks at a time
may be loaded.
(i) Vent lines on tanks with Stage I controls shall have
pressure release valves or restrictors.
(j) The vapor-laden delivery vessel:
(1) shall be designed and maintained to be vapor-
tight during loading and unloading operations
and during transport with the exception of
normal pressure/vacuum venting as required by
regulations of the Department of Transportation;
and
(2) if it is refilled in North Carolina, shall be re-
filled only at:
(A) bulk gasoline plants complying with Rule
.0926 of this Section, or
(B) bulk gasoline terminals complying with Rule
.0927 of this Section or Rule .0524 of this
Subchapter.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0934 COATING OF MISCELLANEOUS METAL
PARTS AND PRODUCTS
(a) For the purpose of this R e gulation Rule, the following
definitions apply:
(1) "Heat sensitive material" means materials that
cannot be exposed to temperatures greater than
180°F to 200°F.
(2) "Air dried coating" means coatings which are
dried by the use of air or a forced air drier.
(3) "Clear coat" means a coating which lacks color
and opacity.
(4) "Extreme performance coatings" means coatings
designed for harsh exposure or extreme environ-
mental conditions.
(5) "Extreme environmental conditions" means
exposure to:
(A) the weather at all times;
(B) temperatures consistently above 203°F;
(C) detergents, scouring, solvents, or corrosive
atmospheres; or
(D) other similar envirormiental conditions.
(b) This Regulation Rule applies to application areas,
flashoff areas, ovens and other processes that are used in the
coating of metal f>arts and products of the following tyjjes of
manufacturing plants:
(1) large farm machinery including harvesting,
fertilizing and planting machines, tractors,
combines, and other similar machines;
(2) small farm machinery including lawn and garden
tractors, lawn mowers, rototillers, and other
similar machines;
(3) small appliances including fans, mixers, blend-
ers, crock pots, dehumidifiers, vacuum cleaners,
and other similar machines;
(4) commercial machinery including computers and
auxiliary equipment, typewriters, calculators,
vending machines, and other similar machines;
(5) industrial machinery including pumps, compres-
sors, conveyor components, fans, blowers,
transformers, and other similar machines;
(6) fabricated metal products including metal cov-
ered doors, frames and other similar structures;
and
(7) any other manufacturing plant that coats metal
parts or products.
(c) This Regulation Rule does not apply to:
(1)
(2)
(3)
(4)
(5)
(6)
sources covered by R e gulationo Rule .0917,
.0918, .0919, .0922, .0923, and .0924 of this
Section;
architectural and maintenance coating;
coating of airplane exterior;
automobile refinishing;
customized coating of automobiles and trucks; or
exterior of marine vessels.
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November 1, 1995
1534
PROPOSED RULES
(d) With the exception stated in Paragraph (e) of this
Rule, emissions of volatile organic compounds from any
coating line subject to this Regulation Rule shall not exceed:
(1) 10.3 pounds of volatile organic compounds per
gallon of solids delivered to a coating applicator
that applies clear coatings;
(2) 6.7 pounds of volatile organic compounds per
gallon of solids delivered to a coating applicator
in a coating application system that utilized air
or forced air driers;
(3) 6.7 pounds of volatile organic compounds per
gallon of soUds delivered to a coating applicator
that applies extreme performance coatings;
(4) 5.1 pounds of volatile organic compounds per
gallon of solids deUvered to a coating applicator
that applies coatings of frequent color changes or
of a large number of colors or applies the coat-
ing that is the first coat on untreated ferrous
substrate; or
(5) where there are no or infrequent color changes
or a small number of colors is applied:
(A) 0.4 pounds of volatile organic compounds per
gallon of solids delivered to a coating applica-
tor that applies fKDwder coatings; or
(B) 5.1 pounds of volatile organic compounds per
gallon of solids deUvered to a coating applica-
tor for any other type of coating.
Whenever more than one of the aforementioned emission
limitations may apply to a process, then the least stringent
emission limitation shall apply to the process.
(e) Any source which has chosen to control emissions of
volatile organic compounds under Rule .0518(e) of this
Subchapter and which has installed air pollution control
equipment in accordance with an air quality permit in order
to comply with this Rule before December 1, 1989, may
comply with the limits contained in this Paragraph instead
of those contained in Paragraph (d) of this Rule. Emissions
of volatile organic compounds from any coating line subject
to this R e gulation Rule shall not exceed:
(1) 4.3 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to a coating applicator that
applies clear coatings;
(2) 3.5 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, delivered to a coating applicator in
a coating application system that utilized air or
forced air driers;
(3) 3.5 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, deUvered to a coating applicator that
applies extreme performance coatings;
(4) 3.0 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compounds, deUvered to a coating applicator that
appUes coatings of frequent color changes or of
a large number of colors or applies the coating
that is the first coat on untreated ferrous sub-
strate; or
(5) where there are no or infrequent color changes
or a small number of colors is applied:
(A) 0.4 pounds of volatile organic compounds per
gallon of coating, excluding water and exempt
compwunds, delivered to a coating applicator
that applies powder coatings; or
(B) 3.0 pounds of volatile organic compounds per
gallon, excluding water and exempt solvents,
deUvered to a coating applicator for any other
type of coating.
Whenever more than one of the aforementioned emission
limitations may apply to a process, then the least stringent
emission limitation shall apply to the process.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0935 FACTORY SURFACE COATING OF FLAT
WOOD PANELING
(a) For the purpose of this R e gulation Rule , the following
defmitions apply:
(1) "Class n hardboard paneling finishes" means
finishes which meet the specifications of Volun-
taiy Product Standard PS-59-73 as approved by
the American National Standards Institute.
(2) "Hardboard" is a panel manufactured primarily
from inter-felted UgnoceUulosic fibers which are
consolidated under heat and pressure In a hot-
press.
(3) "Hardwood plywood" means plywood whose
surface layer is a veneer of hardwood.
(4) "Natural finish hardwood plywood panel" means
a panel whose original grain pattern is enhanced
by essentially transparent fmishes frequently
supplemented by fillers and toners.
(5) "Particle board" means a manufactured board
made of individual wood particles which have
been coated with a binder and formed into flat
sheets by pressure. Thin particleboard has a
thickness of one-fourth Inch or less.
(6) "Printed panel" means a panel whose grain or
natural surface is obscured by fillers and
basecoats upon which a simulated grain or
decorative pattern is printed.
(7) "Tileboard" means paneling that has a colored
waterproof surface coating.
(b) This Regulation Rule applies to factory fmishing of
the following flat wood products:
(1) printed interior wall panels made of hardwood
plywood and thin particleboard;
(2) natural fmish hardwood plywood panels; and
(3) class n finishes of hardboard paneling.
(c) This R e gulation Rule does not apply to the following
factory finished flat wood products:
(1) exterior siding,
1535
NORTH CAROLINA REGISTER
November 1, 1995
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PROPOSED RULES
(2) tileboard,
(3) particleboard used in cabinetry or furniture,
(4) insulation board, or
(5) softwood plywood.
(d) Emissions of volatile organic compounds from any
factoiy finished flat wood product operation subject to this
Regulation Rule shall not exceed:
(1) 6.0 pounds of volatile organic compounds per
1 ,000 square feet of coated finished product of
printed interior wall panels made of hardwood
plywood and thin particle board, or
(2) 12.0 pounds of volatile organic compounds per
1 ,000 square feet of coated finished product of
natural finish hardwood plywood panels, or
(3) 10.0 pounds of volatile organic compounds per
1 ,000 square feet of coated finished product of
class n finishes on hardboard paneling.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0937 MANUFACTURE OF P^fEUMATIC
RUBBER TIRES
(a) For the purpose of this Regulation Rule , the following
definitions apply:
(1) "Bead dipping" means the dipping of an assem-
bled tire bead into a solvent based cement.
(2) "Green tires" means assembled tires before
molding and curing have occurred.
(3) "Green tire spraying" means the spraying of
green tires, both inside and outside, with release
compounds which help remove air from the tire
during molding and prevent the tire from stick-
ing to the mold after curing.
(4) "Pneumatic rubber tire manufacture" means the
production of passenger car tires, light and
medium truck tires, and other tires manufactured
on assembly lines.
(5) "Tread end cementing" means the application of
a solvent based cement to the tire tread ends.
(6) "Undertread cementing" means the appUcation of
a solvent based cement to the underside of a tire
tread.
(b) This Regulation Rule appUes to undertread cementing,
tread end cementing, bead dipping, and green tire spraying
operations of pneumatic rubber tire manufacturing.
(c) With the exception stated in Paragraph (d) of this
Regulation Rule , emissions of volatile organic compounds
from any pneumatic rubber tire manufacturing plant shall
not exceed:
(1) 25 grams of volatile organic compounds per tire
from each undertread cementing operation,
(2) 4.0 grams of volatile organic compounds per tire
from each tread end cementing operation,
(3) 1.9 grams of volatile organic compounds per tire
from each bead dipping operation, or
(4) 24 grams of volatile organic compounds per tire
from each green tire spraying operation,
(d) If the total volatile organic compound emissions from
all undertread cementing, tread end cementing, bead
dipping, and green tire spraying operations at a pneumatic
rubber tire manufacturing facility does not exceed 50 grains
per tire. Paragraph (c) of this Regulation Rule shall not
apply.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(5).
.0951 MISCELLANEOUS VOLATILE ORGANIC
COMPOUND EMISSIONS
(a) This Rule applies to all facilities that use volatile
organic compounds as solvents, carriers, material processing
media, or industrial chemical reactants, or in other similar
uses or that mix, blend, or manufacture volatile organic
compounds for which there is no other applicable rule in
this Section.
(b) This Rule does not apply to architectural or mainte-
nance coating.
(c) Facilities with potential emissions of volatile organic
compounds less than 100 tons p>er year shall comply with
15A NCAC 2D .0518.
(d) With the exception of Paragraph (b) of this Rule, the
owner or operator of any facility with the potential to emit
100 tons per year or more of volatile organic compounds
shall:
(1) install and operate control equipment which
meets the requirements of best available control
technology as defined in and determined by
procedures of Rule .0530 of this Section (A new
best available control technology determination
and procedure need not be performed if in the
judgement of the Director a previous best avail-
able control technology determination is applica-
ble.);
(2) limit emissions of volatile organic compounds
from coating lines not covered by Rules .0917
through .0924, .0934, or .0935 to no more than
6 . 7 pounds of volatile organic compounds p>er
gallon of solids delivered to the coating applica-
tor; or
(3) reduce the emissions of volatile organic com-
pounds firom all sources at the plant site that are
not covered by Subparagraphs (d)(1) or (2) of
this Paragraph or another rule in this Section by
at least 85 percent by weight or down to 40
pounds per day by destruction or by capture of
volatile organic compounds in the emission
stream. (Calculation of capture efficiency shall
be adjusted to reflect eventual emission to the
atmosphere as volatile organic compounds except
for material reused, burned, or reprocessed for
reuse.)
Statutory Authority G.S. 143-215. 3(a)(1);
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PROPOSED RULES
143-215. 107(a)(5).
.0953 VAPOR RETURN PIPING FOR STAGE
II VAPOR RECOVERY
(a) Applicability. This Rule applies to any facility located
in Davidson, Durham, Forsyth, Gaston, Guilford,
Mecklenburg, or Wake counties or the Dutchville Township
in Granville county or that portion of Davie county that is
bounded by the Yadkin River, Dutchman's Creek, NC
Highway 801, Fulton Creek and back to the Yadkin River:
(1) that is built after June 30, 1994, or
(2) whose tanks are replaced or removed for up-
grades or repairs after June 30, 1994.
When a new tank is added, the new tank shall comply with
this Rule.
(b) Exemptions. The burden of proof of eligibility for
exemption from this Rule is on the owner or operator of the
facility. Persons seeking an exemption from this Rule shall
maintain adequate records of throughput and shall furnish
these records to the Director upon request. These records
shall be maintained on file for three years. The following
facilities are exempt from this Rule based upon the previous
two years records:
(1) any facility which dispenses 10,000 gallons of
gasoline or less per calendar month;
(2) any facility which dispenses 50,000 gallons of
gasoline or less per calendar month and is an
independent small business marketer of gasoline;
(3) any facility which dispenses gasoline exclusively
for refueling marine vehicles, aircraft, farm
equipment, and emergency vehicles; or
(4) any tanks used exclusively to test the fuel dis-
pensing meters.
Any facility that ever exceeds the exemptions given in
Subparagraphs (1), (2), (3), or (4) of this Paragraph shall be
subject to all of the provisions of this Rule in accordance
with the schedule given in Paragraph (e) of this Rule, and
shall remain subject to these provisions even if the facility's
later operation meets the exemption requirements.
(c) Definitions. For the purpose of this Rule, the
following definitions apply:
(1) "Affected Facility" means any gasoline service
station or gasoline dispensing facility subject to
the requirements of this Rule.
(2) "CARB" means the California Air Resources
Board.
(3) "Certified Stage II Vapor Recovery System"
means any system certified by the California Air
Resources Board as having a vapor recovery or
removal efficiency of at least 95 percent by
weight.
(4) "Facility" means any gasoline service station or
gasoline dispensing facility.
(5) "ISBM" means independent small business
marketer.
(6) "Independent Small Business Marketer of Gaso-
line" means a facility that qualifies under Section
324 of the Federal Clean Air Act.
(7) "Operator" means any person who leases, ojjer-
ates, controls, or supervises a facility at which
gasoline is dispensed.
(8) "Owner" means any person who has legal or
equitable title to the gasoline storage tank at a
facility.
(9) "Stage n Vapwr Recovery" means the control of
gasoline vapor at the vehicle fill-pipe, where the
vapors are capmred and returned to a vapor-tight
underground storage tank or are captured and
destroyed.
(10) "Throughput" means the amount of gasoline
dispensed at a facility during any calendar
month.
(11) "VapxDr Recovery Dispenser Riser" means piping
rising from the vapor recovery piping to the
dispenser.
(12) "Vapor Recovery Piping" means vapor return
piping connecting the storage tank(s) with the
vapor recovery dispenser riser(s).
(d) Requirements. Affected facilities shall install the
necessary piping for future installation of CARB certified
Stage n vapor recovery system. The vapior piping shall
extend from the tanks to the pumps. The vapor piping shall
be installed in accordance with the following requirements:
(1) Gasoline vapors shall be:
(A) transferred from each gasoline dispenser to the
underground storage tank individually, or
(B) manifolded through a common header from
which a single return line is connected through
another manifold to all of the underground
tanks.
Each vapor return pipe shall allow the transfer
of gasoline vapors to the tank from which the
liquid gasoline is being drawn;
(2) Pipe diameter must meet manufacturer's specifi-
cations. If the manufacturer does not specify
diameters, the following minimum pipe diame-
ters apply. If the manufacturer only specifies
diameters for part of the system, the following
diameters apply for the pipe(s) not specified.
All fittings, connectors, and joints must have an
inside diameter equal to the inside diameter of
the pipe it is attached to. Diameters are speci-
fied for the number of nozzles which may be
operated at the same time.
(A) Vapor Recovery Dispenser Risers
(i) 3/4" for vapor recovery dispenser risers
returning vapors from 1 nozzle; or
(ii) 1 " for vapor recovery dispenser risers
returning vapors from 2 nozzles;
(B) Vapor Recovery Piping
(i) Two inches for one, two, or three nozzles;
(ii) Two and one half inches for four or five
nozzles;
(iii) Three inches for six, seven, eight, or nine
1537
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
I
\
)
nozzles;
(iv) Three and one half inches for 10, 11, or
12 nozzles; or
(v) Four inches for more than 12 nozzles;
(3) All piping and fittings shall be installed in
accordance with manufacturer's instructions and
specifications. Metal pipe shall be minimum
schedule 40 welded or seamless steel per ASTM
A-53, "Specification for Pipe, Steel, Black and
Hot-Dipped, Zinc-Coated Welded and Seamless
Pipe". Fittings shall be 150 pounds cold water
screwed malleable iron. Pipe and fittings shall
be galvanized and pipe threads shall be zinc-
coated. Nonmetallic pipes and fittings shall be
U/L Hsted under nonmetallic primary pipes and
fittings for underground flammable liquids (gas
and oil equipment directory);
(4) Each vapor return pipe shall slope towards the
storage tank with a minimum grade of 1/4
inches per foot. Special care shall be taken to
ensure that no low points or sags exist along the
return piping;
(5) All vapor return and vent piping shall be pro-
vided with flexible joints or swing joints at each
tank connection and at the base of the vent pipe
riser where it fastens to a building or other
structure;
(6) All vapor return pipe-trenching shall be com-
pacted to 90 percent of the standard proctor
according to ASTM D-698 "Laboratory Com-
paction Characteristics of Soil Using Standard
Effort" of the area soil before the pipes are
installed and back-filled with sand or other
material approved by the pipe manufacturer at
least six inches below and above the piping;
(7) The pipes shall not be driven over or in any
other way crushed prior to paving or surfacing;
(8) The vapor return piping or manifolded piping on
a vacuum assisted system shall enter a separate
opening to the tank from that connected to the
vent pipe or the Stage I piping;
(9) All vapor return piping shall be tagged at the
termination point recording the function of the
piping. In addition, a record of the installation
of the Stage n vapor return piping shall be kept
in the facility;
(10) Vent piping shall be constructed of materials in
accordance with Subparagraph (3) of this Para-
graph;
(11) All vent pipes shall be a minimum of two inches
inside diameter or meet the local Fire Codes;
and
(12) All vent pipes shall slope towards the under-
ground storage tank with a grade of at least 1 /4
inch per linear foot.
(e) Compliance Schedule. Compliance under Paragraph
(d) of this Rule by the affected facility shall coincide with
the completion of the tank installation or repair. Facilities
that lose their exemption under Paragraph (b) of this Rule
shall comply with this Rule within 18 months after the day
the owner or operator of the facility has been notified by the
Director that his exemption under Paragraph (b) of this Rule
has been revoked.
(f) Testing Requirements.
(1) Within 30 days after installation of the vapor
return piping, the owner or operator of the
facility shall submit reports of the following tests
to be completed as described in EPA-450/3-91-
022b:
(A) Bay Area Source Test Procedure ST-30, Leak
Test Procedure, or San Diego Test F*rocedure
TP-91-1, Pressure Decay /Leak Test Proce-
dure, and
(B) Bay Area Source Test Procedure ST-27,
Dynamic Back Pressure, or San Diego Test
Procedure TP-91-2, Pressure Drop vs
Flow/Liquid Blockage Test Procedure.
(2) Testing shall be in accordance with Rule .0912
of this Section.
(3) The owner or operator of the facility shall notify
the Regional Office Supervisor by telephone at
least five business days before back-filling the
trenches and at least 10 business days before the
tests given in Subparagraph (1) of this Paragraph
are to be jjerformed to allow inspection by the
Division. The owner or operator may com-
mence back-filling five days after notification
has been given to the Division.
(4) The owner or operator of the facihty and the test
contractor shall report all test failures to the
Regional Office Supervisor within 24 hours of
the failure.
(5) The Director may require the owner or operator
of the facility to jjerform any of the tests in
Subparagraph (1) of this Paragraph if there are
any modifications or repairs.
(6) Where the Division conducts a test on the vaf)or
control system, it shall be without compensating
the owner or operator of the facility for any lost
revenues incurred due to the testing procedure.
(g) Referenced documents
(1) EPA-450/3-91-022b, "Technical Guidance -
Stage n Vapor Recovery Systems for Control of
Vehicle Refueling Emissions at Gasoline Dis-
pensing Facilities, Volume II: Appendices",
November 1991, cited in this Rule is hereby
incorfKjrated by reference and does not include
subsequent amendments or editions. A copy of
this document is available for inspection at the
Regional Offices of the North Carolina Depart-
ment of Environment, Health, and Natural
Resources (Addresses are given in Rule .0103 of
this Subchapter). Copies of this document may
be obtained through the Library Services Office
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1538
PROPOSED RULES
(MD-35), U.S. Environmental Protection
Agency, Research Triangle Park or National
Technical Information Services (NTIS), 5285
Port Royal Road, Springfield V A 22161. The
NTIS number for this document is PB-
92132851, and the cost is fifty-two dollars
($52.00).
(2) The American Society for Testing and Materials
(ASTM) specification and test methods cited in
this Rule are hereby incorfxirated by reference
including any subsequent amendments and
editions. A copy of the ASTM specification and
test method can be obtained from the Air Qual-
ity Section, Division of Environmental Manage-
ment, P.O. Box 29525, Raleigh, North Carolina
27626, at no cost.
Statutory Authority G.S. 143-215. 3(a)(1); 143-215. 107(a);
150B-21.6.
.0954 STAGE n VAPOR RECOVERY
(a) Applicability. This Rule applies to the control of
gasoline vapors at the vehicle fill-pipe during refueling
operations at a facility. The vapors are captured and
returned to a vapor-tight underground storage tank or are
captured and destroyed. These systems must be installed at
all facilities that dispense gasoline to motor vehicles unless
exempted under Paragraph (b) of this Rule.
(b) Exemptions. The following gasoline dispensing
facilities are exempt from this Rule based upon the previous
two years records:
(1) any facility which dispenses 10,000 gallons of
gasoline or less of goaolino during per calendar
month;
(2) any facility which dispenses 50,000 gallons of
gasoline or less during per calendar month and
is an independent small business marketer of
gasoline;
(3) any facility which dispenses gasoline exclusively
for refueling marine vehicles, aircraft, farm
equipment, and emergency vehicles; or
(4) any tanks used exclusively to test the fuel dis-
pensing meters.
Any facility that ever exceeds the exemptions given in
Subparagraphs (1), (2), (3) or (4) in this Paragraph shall be
subject to all of the provisions of this Rule in accordance
with the schedule given in Subparagraph (f) of this Rule,
and shall remain subject to these provisions even if the
facility's later operation meets the exemption requirements.
(c) Proof of Eligibility. The burden of proof of eligibility
for exemption from this Rule is on the owner or operator of
the facility. Persons seeking an exemption from this Rule
shall maintain the following:
(1) chronologically arranged bills of lading for
receipt of gasoline shipments from the last three
years, and
(2) daily inventory of each gasoline type for each
day of o{>eration or equivalent records as re-
quired; this shall be maintained for the last three
years.
These records shall be furnished to the Director upon
request.
(d) Definitions. For the purpose of this Rule, the follow-
ing definitions apply:
(1) "CARB" means the California Air Resources
Board.
(2) "Certified STAGE 11 Vapor Recovery System"
means any system certified by the California Air
Resources Board as having a vapor recovery or
removal efficiency of at least 95 {jercent by
weight.
(3) "Defective equipment" means any absence,
disconnection, or malfunction of a Stage 11 vapor
recovery system component which is required by
this Rule including the following:
(A) a vapor return line that is crimped, flattened or
blocked or that has any hole or slit that allows
vapors to leak out;
(B) a nozzle bellows that has any hole or tear large
enough to allow a 1/4 inch diameter cylindrical
rod to pass through it or any slit one inch or
more in length;
(C) a nozzle face-plate or cone that is torn or
missing over 25 percent of its surface;
(D) a nozzle with no automatic overfill control
mechanism or an inoperable overfill control
mechanism;
(E) an inoperable or malfunctioning vapor process-
ing unit, vacuum generating device, pressure
or vacuum relief valve, vaf>or check valve or
any other equipment normally used to dispense
gasoline, or that is required by this Rule; or
(¥) a failure to meet the requirements of Para-
graph (g) of this Rule.
(4) "Facility" means any gasoline service station,
gasoline dispensing facility, or gasoline cargo
tanker.
(5) "ISBM" means independent small business
marketer.
(6) "Independent Small Business Marketer of Gaso-
line" means a facility that qiulifies under Section
324 of the Federal Clean Air Act.
(7) "Operator" means any person who leases, oper-
ates, controls, or supervises a facility at which
gasoline is dispensed.
(8) "Owner" means any person who has legal or
equitable title to the gasoline storage tank at a
facility.
(9) "Pressure Balanced Stage 11 System" means one
which is not vacuum-assisted. That is, the
volume of vapor in the automobile's fuel tank
displaced by the incoming liquid gasoline equals
the space in the undergroimd tank created by the
gasoline leaving.
1539
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
(10) "Remote Vapor Check Valve" means a check
valve in the vapor return line but not located in
the nozzle.
(11) "Stage n Vapor Recovery" means to the control
of gasoline vapor at the vehicle fill-pipe, where
the vapors are captured and returned to a va-
por-tight storage tank or are captured and de-
stroyed.
(12) "TTiroughput" means the amount of gasoline
dispensed at a facility during any calendar month
after June 30, 1994.
(e) Stage II Requirements. No person shall transfer or
permit the transfer of gasoline into the fuel tank of any
motor vehicle at any applicable facility unless:
(1) the transfer is made using a Certified Stage 11
vapor recovery system that meets the require-
ments of the inspections;
(2) all installed Stage D vajxjr recovery systems use
coaxial vapor recovery hoses; no dual-hose
designs shall be used;
(3) all installed Stage II vapor recovery systems
used are certified by CARB except that the Stage
I system need not be CARB certified. In addi-
tion, no Stage II system shall employ a remote
vapor check valve. Pressure balanced Stage II
systems may be used; and
(4) the underground vapor return piping satisfies the
requirements of Rule .0953 of this Subchapter.
In the event that CARB revokes certification of an installed
system, the owner or operator of the facility shall have four
years to modify his equipment to conform with re-certifica-
tion requirements unless modifications involve only the
replacement of disjjenser check valves, hoses, or nozzles or
appurtenances to these components in which case the
allowed time period is three months. This time period is
defined as the period from the day that the owner or
operator of the facility has been officially notified by the
Director.
(f) Compliance Schedule. Affected gasoline service
station or gasoline dispensing facilities shall comply with
this Rule as follows:
(1) if the gasoline service stations or gasoline dis-
f)ensing facilities are subject to the requirements
of this Rule in accordance with Paragraph (c) of
Rule .0902 of this Section, compliance shall be
achieved no later than:
(A) May 1, 1996, for facilities having any single
monthly throughput of at least 100,000 gallons
per month;
(B) May 1, 1997, for facilities having any single
monthly throughput of greater than 10,000
gallons but less than 100,000 gallons;
(C) for affected facilities owned by a single ISBM:
(i) May 1, 1996, for 33 percent of affected
facilities;
(ii) May 1, 1997, for 66 percent of the af-
fected facilities;
(iii) May 1, 1998, for the remainder of the
affected facilities;
By January 31, 1996, the ISBM shall provide
the Director with a list detailing specific sched-
uling of the ISBM station conversion.
(D) 18 months after the day the owner or ojjerator
of the facility has been notified by the Director
that his exemption under Paragraph (b) of this
Rule has been revoked; or
(E) before beginning operation for islands con-
structed after April 30, 1995.
(2) if the gasoline service station or gasoline dis-
pensing faciUty is subject to the requirements of
this Rule in accordance with Paragraph (d) of
Rule .0902 of this Section, compliance shall be
achieved no later than:
(A) one year from the date that the Director no-
tices in the North Carolina Register that an
area is in violation of the ambient air quality
standard for ozone, for facilities having any
single monthly throughput of at least 100,000
gallons per month;
(B) two years from the date that the Director
notices in the North Carolina Register that an
area is in violation of the ambient air quality
standard for ozone, for facilities having any
single monthly throughput of greater than
10,000 gallons but less than 100,000 gallons;
(C) for affected facilities owned by a single ISBM:
(i) one year from the date that the Director
notices in the North Carolina Register that
an area is in violation of the ambient air
quaUty standard for ozone, for 33 percent
of affected facilities;
(ii) two years from the date that the Director
notices in the North Carolina Register that
an area is in violation of the ambient air
quality standard for ozone, for 66 percent
of the affected facilities;
(iii) three years from the date that the Director
notices in the North Carolina Register that
an area is in violation of the ambient air
quality standard for ozone, for the remain-
der of the affected facilities;
(D) 18 months after the day the owner or operator
of the facility has been notified by the Director
that his exemption under Paragraph (b) of this
Rule has been revoked; or
(E) before beginning operation for islands con-
structed after the Director notices in the North
Carolina Register that an area is in violation of
the ambient air quality standard for ozone.
(g) Testing Requirements
(1) Within 30 days after the commencement of
ofjeration of the Stage II system and every five
years thereafter, the owner or operator of the
facility shall submit reports of the following tests
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1540
PROPOSED RULES
as described in EPA-450/3-91-022b:
(A) Bay Area Source Test Procedure ST-30, Leak
Test Procedure, or San Diego Test Procedure
TP-91-1, Pressure Decay/Leak Test Procedure
every five years;
(B) Bay Area Source Test Procedure ST-27,
Dynamic Back Pressure, or San Diego Test
Procedure TP-91-2, Pressure Drop vs
Flow/Liquid Blockage Test Procedure every
five years; and
(C) Bay Area Source Test Procedure ST-37,
Liquid Removal Devices every five years.
If the tests have been performed within the last
two years the owner or ojjerator may submit a
copy of those tests in lieu of retesting. Testing
shall be in accordance with Rule .0912 of this
Section.
(2) The owner or operator shall perform daily
testing and inspections as follows:
(A) daily tests to ensure proper functioning of
nozzle automatic overfill control mechanisms
and flow prohibiting mechanisms, and
(B) daily visual inspection of the nozzle bellows
and face-plate.
(3) The owner or opierator of the facility and the test
contractor shall report all test failures to the
Regional Office Supervisor within 24 hours of
the failure.
(4) The Director may require the owner or operator
of the facility to perform any of the tests in
Subparagraph (1) of this Paragraph if there are
any modifications or repairs.
(5) Where the Air Quahty Division conducts tests or
upon requirement from the Director to test the
vapor control system it shall be without compen-
sating the owner or operator of the facilit)' for
any lost revenues incurred due to the testing
procedure.
(h) Operating Instructions and Posting
(1) The owner or operator of the facility shall post
operating instructions for the vapor recovery
svstem on the top one-third of the front of each
gasoline dispenser to include the following:
(A) a clear description of how to correctly dispense
gasoline with the vapor recover>' nozzles,
(B) a warning that repeated attempts to continue
dispensing gasoline, after the system has
indicated that the vehicle fuel tank is full (hy
automatically shutting off), may result in
spillage or recirculation of gasoline,
(C) a telephone number to report problems experi-
enced with the vapor recovery system to the
owner or operator of the facility, and
(D) a telephone number to report problems experi-
enced with the vaf>or recovery system to the
Director.
(2) TTie owner or operator shall provide written
instructions on site as detailed in EPA-450/3-91-
022b to insure that employees of the facility
have an accurate understanding of the operation
of the system and, in particular, when the sys-
tem is malfunctioning and requires repair.
(i) Other General Requirements. The owner or operator
of the facihty shall conspicuously post "Out of Order" signs
on any nojizle associated with any aboveground part of the
vapor recovery system which is defective until the system
has been repaired to bring it back into compliance with this
Rule.
(j) Record-keeping and Reporting. Owners or operators
of the facility shall maintain records in accordance with
Rule .0903 of this Section on compliance and testing.
(k) Referenced document. EPA-450/3-91-O22b, "Techni-
cal Guidance - Stage n Vapor Recovery Systems for Control
of Vehicle Refueling Emissions at Gasoline Dispensing
Facilities, Volume 11: Appendices", November 1991, cited
in this Rule is hereby incorporated by reference and does
not include subsequent amendments or editions. A copy of
this document is available for inspection at the Regional
Offices of the North Carolina Department of Environment,
Health, and Natural Resources (addresses are given in Rule
.0103 of this Subchapter). Copies of this document may be
obtained through the Library Services Office (MD-35), U.S.
Environmental Protection Agency, Research Triangle Park
or National Technical Information Services, 5285 Port
Royal Road, Springfield VA 22161. The NTIS number for
this document is PB-92 132851 and the cost is fifty-two
dollars ($52.00).
Stamtory Authority G.S. 143-215. 3(a)(1); 143-215. 107(a);
1508-21. 6.
SECTION .1300 - OXYGENATED GASOLINE
STANDARD
.1301 PURPOSE
This Section sets forth oxygenated gasoline standards in
areas where an oxygenated gasoline program is implemented
pursuant to State law for all gasoline sold wholesale for use
or for all gasoline sold retail, offered for use, dispensed, or
otherwise provided for use in any spark-ignition engine
other than aircraft in the areas defined in Rule . 1302 of this
Section during the time periods defined in Rule . 1302(c) sad
. IjQ ' ICb) of this Section.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(3), (7).
.1302 APPLICABILITY
fft^ — TTiis Section applioo to gasoline identified in Rule
.1301 of this Section during the timo jK > riod doscribod in
Paragraph (o) of this Rul e in th e Ral e igh/Durham Metropoli
tan StntiDtiool i\rea ooncioting of E>urbam, Franklin, Orang e ,
and Woke Countioo.
(b) (a) This Section shall apply to gasoline identified in
1541
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
Rule .1301 of this Section during the time period described
in Paragraph (c) of this Rule in any of the following areas,
and in that area only, when the Director notices in accor-
dance with Paragraph (b) of dus Rule in the North Carolina
Register that tho area is in violation of oxygenated gasoline
is needed in that area to attain and maintain the ambient air
quality standard for carbon monoxide:
(1) the Greensboro/ Winston-Salem/High Point
Metropolitan Statistical Area consisting of
Davie, Davidson, Forsyth, Guilford, Randolph,
Stokes, and Yadkin Counties;
(2) the Charlotte/Gastonia/Rock Hill Metropolitan
Statistical Area consisting of Cabarrus, Gaston,
Mecklenburg, and Union Counties; and
(3) the Raleigh/Durham Metropolitan Statistical
Area consisting of Durham, Franklin, Orange,
and Wake Counties.
ViolationB of th e ambi e nt air quality standard for oarbon
monoxide shall bo dot e rminod in aooordonoo with '10 CFR
gQ 3
(b) If a violation of the ambient air quality standard for
carbon monoxide is measured in accordance with 40 CFR
50.8 in one of the areas named in Paragraph (a) of this
Rule, the Director shall initiate analyses to determine if
additional measures are needed to attain and maintain the
ambient air quality standards in that area. If the Director
finds that 2.7 percent oxygen by weight oxygenated gasoline
is needed, the Director shall notice in the North Carolina
Register by the following September i that only oxygenated
gasoline shall be sold in that area beginning on the following
November L. The notice shall identify the area in which
oxygenated gasoline shall be sold. Also by the following
September 1. the Director shall notify the Gasoline and Oil
Inspection Board and the primary gasoline distributors that
only oxygenated gasoline shall be sold in the area beginning
on the following November J^
(c) This Section applies to gasoline identified in Rule
.1301 of this Section and in the counties identified in
Paragraph (a) or (b) of this Rule for the four-month period
beginning November 1 and running through the last day of
February of the following year.
(d) Gasoline in storag e : storage
(4^ within tho oountioo idontifiod in Paragraph (a) of
this Rule prior to Novombor 1 or
(3) within the counties identified in Paragraph (a) of
this Rule prior to November 1 of the year in
which this Section goes into effect
at a dispensing facility having total gasoline tank capacity of
less than 550 gallons or a total weekly dispensing rate of
less than 550 gallons is exempted from Rule . 1304 of this
Section, but any gasoline supplied to the facility during the
period identified in Paragraph (b) or (c) of this Rule shall
comply with Rule .1304 of this Section.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(3),(7).
.1304 OXYGEN CONTENT STANDARD
(^ Gasoline to which this Section applies in accordance
with Rule . 1302(b) {a} of this Section shall have an oxygen
content of not less than 2.7 jjercent by weight during the
period defined in Rule .1302(c) of this Section.
(b) Gasoline to which thi s S e ction appli e o in aooordonoo
with Rul e .1302(a) of this Sootion ohall have an oxyg e n
content of not looa than:
(4) 2.7 percent by woight until February 2 8 , 1995;
9^
(^
2.0 poroont by weight after Octob e r 31> 1995 to
February 2 8 , 2000;
2.2 poroont by woight aftor October 31, 2000 to
Fobruory 2 8 , 2005; and
(4) 2.6 percent by w e ight aft e r Gotober 31, 2005
during th e p e riod d e fin e d in Paragraph (o) of Rul e . 1302 of
this Sootion.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(3). (7).
SUBCHAPTER 2Q - AIR QUALITY PERMIT
PROCEDURES
SECTION .0400 - ACID RAIN PROCEDURES
.0401 PURPOSE AND APPLICABILITY
(a) The purpose of this Rule is to implement Phase n of
the federal acid rain program pursuant to the requirements
of Title IV of the Clean Air Act as provided in 40 CFR Part
IL
(b) (a) The procedures and requirements under this
Section do not apply until the EPA approves this Section
and Section .0500 of this Subchapter.
(c) A pplicability.
(b) £1} Each of the following units shall be an
affected unit, and any facility that includes such
a unit shall be an affected facility, subject to the
requirements of the Acid Rain Program:
(4) (A) A unit listed in 40 CFR Part 73, Subpart
B, Table 1.
(3) £B} A unit that is identified as qualifying for
an allowance allocation under 40 CFR 73.10
Table 2 or 3 S e ctions 403 and -105 of the
fodoral Clean Air Act and any other existing
utihty unit, except a unit under Subparagraph
(2) of this Paragraph Paragraph (o) of this
(^ £Ci A utility unit, except a unit under Sub-
paragraph (2) of this Paragraph Paragraph (o)
of this Rul e, that:
£i} is a new unit; er
(ii) did not serve a generator with a
nameplate capacity greater than 25 MWe
on November 15, 1990, but serves such a
generator after November 15, 1990Ti
was a simple combustion turbine on No-
vember 15. 1990 but adds or uses auxil-
(A)
(B)
(iii)
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1542
PROPOSED RULES
iary firing after November 15. 1990;
(iv) was an exempt cogeneration facility under
Part (2)(D) of this Paragraph but during
any three calendar year period after No-
vember 15, 1990, sold to a utility power
distribution system, an annual average of
more than one third of its potential electri-
cal out-put capacity and more than
219.000 MWe-hrs electric output, on a
gross basis;
(v) was an exempt qualifying facility under
Part (2)(E) of this Paragraph but at any
time after the later of November 15, 1990.
or the date the facility commences com-
mercial operation, fails to meet the defini-
tion of qualifying facility,
(vi) was an exempt independent power produc-
tion facility under Part (2)(F) of this Para-
graph but at any time after the later of
November 15. 1990, or the date the facil-
ity commences commercial operation, fails
to meet the definition of independent
power production facility; or
(yji) was an exempt solid uaste incinerator
under Part (2)(G) of this Paragraph of this
Rule but during any three calendar year
period after November 15, 1990, con-
sumes 20 p>ercent or more (on a Btu basis)
fossil fuel.
(e) {2} The following t>pes of units are not affected
units subject to the requirements of the Acid
Rain Program:
f4-) £A} A simple combustion turbine that com-
menced operation before November 15, 1990.
(S) (B) Any unit that commenced commercial
operation before November 15, 1990, and that
did not, as of November 15, 1990, and does
not currently, serve a generator with a name-
plate capacity of greater than 25 MWe.
(3) (Cj Any unit that, during 1985, did not serve
a generator that produced electricity for sale
and that did not, as of November 15, 1990,
and does not currently, serve a generator that
produces electricity for sale.
f4) (D) A co-generation facility Co generation
units, which:
(i) for a unit that commenced construction on
or prior to Nosember 15, 1990, was con-
structed for the purpose of supplying equal
to or less than one-third its potential elec-
trical output capacity or equal to or less
than 219.000 MWe-hrs actual electrical
output on an annual basis to any utility
power distribution system for sale (on a
gross basis). If the purpose of construc-
tion is not kno\<.n. it will be presumed to
be consistent uith actual operation from
(ii) for units that
^
1985 through 1987. However, if in any
three calendar year period after November
15. 1990. such unit sells to a utility power
distribution system an annual average of
more than one-third of its potential electri-
cal output capacity and more than 219,000
MWe-hrs actual electrical output (on a
gross basis), that unit shall be an affected
unit, subject to the requirements of the
Acid Rain Program, or
for units that commenced construction
after November 15, 1990, supplies equal
to or less than one-third its potential elec-
trical output capacity or equal to or less
than 219. CKX) MWe-hrs actual electrical
output on an annual basis to any utility
power distribution system for sale (on a
gross basis). However, if in an^ three
calendar year period after November 15.
1990. such unit sells to a utility power
distribution system an annual average of
more than one-third of its potential electri-
cal output capacity and more than 219.000
MWe-hrs actual electrical output (on a
gross basis), that unit shall be an affected
unit, subject to the requirements of the
Acid Rain Program.
(E) A qualifying facility Qualifying facilitioo,
which Qjo qualifying amall production facilitiiM
within th e m e aning of S e ction 3(17)(C) of the
F e d e ral Pow e r A«t »f — a qualif>'ing
cogoneration faoility within the meaning ef
Section 3(18)(B) of the Federal Powor Act.
that:
£i} has, as of November 15. 1990. one or
more qualifying power purchase commit-
ments to sell at least 15 percent of its total
planned net output capacity; and
(ii) consists of one or more units designed by
the owner or operator with total installed
net output capacity not exceeding 130
percent of the total planned net output
capacity. If the emissions rates of the
units are not the same, the Administrator
uill designate uhich units are exempt.
(6) (F) An Now indepiendent power production
facility faoilitioo. that:
(i] has, as of November 15, 1990, one or
more qualifying power purchase commit-
ments to sell at least 15 percent of its total
planned net output capacity; and
£ii} consists of one or more units designed by
the owner or operator with total installed
net output capacity not exceeding 130
percent of the total planned net output
capacity. If the emissions rates of the
units are not the same, the Administrator
1543
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
will designate which units are exempt.
f) {G) A solid Solid waste incinerator, inoin e m '
tefSr if more than 80 percent (on a Btu basis)
of the annual fiiel consumed at such incinerator
is other than fossil fuels. For a solid waste
incinerator which began operation before
January \^ 1985, the average annual fuel
consumption of non-fossil fuels for calendar
years 1985 through 1987 must be greater than
80 percent for such an incinerator to be ex-
empt. For a solid waste incinerator which
began operation after January J^ 1985. the
average annual fuel consumption of non-fossil
fuels for the first three years of operation must
be greater than 80 percent for such an inciner-
ator to be exempt. If. during any three calen-
dar year period after November 15. 1990.
such incinerator consumes 20 percent or more
(on a Btu basis) fossil fuel, such incinerator
will be an affected source under the Acid Rain
Program.
(*) £Hi A non-utility unit.
(3) A certifying official of any unit may petition the
Administrator for a determination of a pplicabil-
ity under 40 CFR 72.6(c). The Administrator's
determination of applicability shall be binding
upon the Division, unless the petition is found to
have contained significant errors or omissions.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0402 ACID RAIN PERMITTING PROCEDURES
(a) For the purpose of this Rule the definitions contained
in 40 CFR 72.2 and the measurements, abbreviations, and
acronyms contained in 40 CFR 72.3 shall apply.
(b) Affected units as defined in 40 CFR 72.6 and Sub-
paragraph (c)(1) of Rule .0401 of this Section shall comply
with the permit, monitoring, sulfur dioxide, nitrogen oxides,
excess emissions, recordkeeping and reporting, liability, and
any other provisions as required in 40 CFR Part 72. The
term "permitting authority" shall mean Division of Environ-
mental Management, and the term "Administrator" shall
mean the Administrator of the United States Environmental
Protection Agency.
(c) If the provisions or requirements of 40 CFR part 72
conflict with or are not included in Section .0500 of this
Subchapter, the Part 72 provisions and requirements shall
apply and take precedence.
The terms used in thio Sootion shall hav e th e m e oningo o e t
forth in th e fodoral Cloon Air Aot and in this Subchapt e r as
follows:
(4^ "Acid — Fftifl — omissions — reduction — rcyquiromont"
moans a roquirom e nt und e r the Aoid Rain Pro
gram to roduo e th e e mioBiono of sulfur dioxid e or
nitrogen oxides from a unit to a 3{)ocifiod lovol or
by a spocifiod poroontago.
(3) "Aoid Rain Program" moona the national Bulfiif
dioxid e and nitrog e n oxid e s air pollution control
and omissions r e duotion program e stablished in
aocordonoo with Title IV.
"Act" moons the Clean Air Aot. 42 U.S.C. 7 4 01,
(4)-
(40)-
e t. o e q. as am e nd e d by Public Law No. 101 519
(Nov e mb e r 15. 1990).
"Administrator" moans tho administrator of the
Unitod StatoB Environmontol Protootion Agoncy
(EPA) or the Administrators'o duly authorized
roprooontativ e .
"Affoctod Faoilit>'" moons a facility that includoa
ono Of more affootod units.
"Affoctod Unit" m e ans a unit that is subjoot to any
aoid rain e missions r e duotion r e quir e m e nt or aoid
Htin omissions limitation.
f?) "Allocate or allocation" moons tho initial crediting
of an ollowonoo by th e Administrator to on allow
ano e Tracking System unit aooount of g e n e ral
account.
(8) "Allowanoo" moons an authorization by tho Ad
ministrator under tho Acid Rain Program to emit
up to on e ton of sulfur dioxid e during or aft e r a
spocifiod calendar year.
(9) "Allowance deduction" or "deduct" when referring
to allowonooo means tho p e rmanent withdrawal of
allowano e s by th e Administrator from an Allow ■
once Tracking System compliance subaccount to
account for tho number of tho tons of s ulfur
dioxid e e missions from on aff e ot e d unit for tho
cal e ndar y e ar, for tonnage emiosions e stimatos
calculated for pwriods of missing data as provided
in 4 CFR port 75. or for any other allowance
surrondor obligations of th e Acid Rain Program.
"Allowono e tracking system" m e ons tho Aoid Rain
Program systom by ■ ^ hioh tho Administrn tef
allocatoQ. rooords, deducts, and tracks allowanooa.
(44) "C e rtificat e of r e pr e s e ntation" moons th e oom
pl e ted and sign e d oubmisaion roquirod by 10 CFR
72.30. for oortifying tho appointment of a dosig
noted roprosentative for on affoctod facility or
group of identified aff e oted faoiliti e e authoriz e d to
r e pr e s e nt th e own e rs and operators of ouch faoil
ity(facilities) and of tho affoctod units at such
facility (facilitio s ) with regard to matters under tho
Aoid Rain Program.
of this (43) "Comm e nc e d oommoroial operation" — m e ans to
hove begun to gonemte oloctricit)' for solo, includ
ing tho solo of tost generation.
(45) "D e signat e d repres e ntativ e " m e ons o responsibl e
natural p e rson authoriz e d by th e own e rs and
operators of an affoctod facilit)^ and of all the
affoctod units at the focilit)', as evidenced by a
c e rtificat e of representation submitt e d in aooor
donee widi CFR 10 Port 73, Subpart B. to r e pr e
sont and legally bind ooch o^'nor and operator, qa
matter of federal law, in matters pertaining to
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1544
PROPOSED RULES
fM^
ft#^
{Wt
(W>-
^m-
{m-
9m-
oif-
(33^
(3^
04)-
(35)-
tho Acid Rain Program. WTionovor the torm
"rooponoible offioiar io uood in thio Subohapt i 3r it
shall b e doom e d to r e f e r to tha "d a oignated r e pr e
aontativo" with regard to all mattopo undor tho
Acid Rain Program.
"Droft p e rmit" moanc th e v e roion of the p e rmit, or
tho aoid rain portion of on op e rating permit, that
a p>ormitting authority offers for public commont.
"Facility" mc<mB any oont i guou i B group of one or
mor e oouro e o.
"Gen e ral acoount" m e ans on Allo' . ' . 'ano e Tracking
System account — that is not a unit account.
"Generator" — moons — aay — device — that — produces
olootrioity and was or would have b ee n r e quir e d to
bo r e ported as a g e n e rating unit purouont to th e
United States Department of Energy Form 8 60
(1990 ed i tion).
"mmBtu" — m e ans — millions of British Th e ra fll-
Unite.
"MWo" moons megawatts of oloctricity.
"NADB" moons tho National iMlowanco Data
(36^
"Nam e plato capocit)'" m e ans th e maximum olootri
cal generating output (exprossod in MWo) that a
generator can sustain ovor a spocifiod poriod of
tim e wh e n not r e otriot e d by s e oiwnal or other
d e ratings, as list e d in th e NADB und e r th e data
field "N^^MECJ\P" if tho gonorator is listed in tho
NADB or as measured in accordance with the
Unit e d Stat e s D e partment of En e rgy standards if
tho gonorator io not list e d in th e NADB.
"Offset plan" moons a plan pursuant to 40 CFR
part 77 for offsetting exoesa emissions of sulfur
dioxid e that have ooourrod at an aff e ot e d unit in
any cal e ndar y e ar.
"Owner or operator" — moons any person who
operates, control s , or s up>er i 'iseg an affected unit
or an aff e ot e d facility and shall includ e , but not b e
limited to, any holding oompony, utility 6>st e m, or
plant manager of an affected unit or affoctod
facility.
"Permit" as it is us e d in this S e ction m e ans th e
l e gally binding written document, or jxirtion of
such document, issued by tho Director including
any permit revisions, specifying the Aoid Rain
Program roquir e m e nto applicable to an affootod
facility, to e ach affect e d unit at an aff e ct e d faoil
ity, and to the owners and operators and tho
designated ropro s ontative of tho affoctod unit or
th e aff e oted facility. — In addition, th e p e rmit sha -U
satisfy^ th e proc e dur e s und e r S e ction .0500 of this
Subchapter.
"Permit revision" moons a permit modification,
fest — traok — modification, — administrativ e — p e rmit
am e ndment, or automatic permit am e ndm e nt, as
provided in 4 CFR Port 72, Subpart H.
"Permitting authority" moons either:
(37)—
my-
tho Administratof, o r
th e Dir e ctor.
m)-
(30)-
9^
(^3)-
my-
"Phoc e I utility" rof e re to any of 110 utility planto
identified by tho EPA and listed in Section 104,
Table A of tho Act. — Each unit haa a nameplato
capacity of gr e ater than 100 MW e and e mito
greater than 2.5 Ibo/mmBtu of sulfur dioxido.
"Phase II utility" refers to tho Lncluoion of oddi
tional utilities with capaoitioo greater than 25
MW e to th e Aoid Rain Program.
"S e cr e tary of En e rgy" r e f e rs to tho S e or e tor)^ of
tho United States Dopartmont of Energy or tho
Socretar)''s duly authorized roproeontativo.
"Simple Combustion Turbin e " moons a unit that i s
a rotor)' e ngine driven by a gas undor proosuro
that is crootod by tho oombustion of any fuel.
TTiis term includes combined cycle units without
auxiliary — firing but exoludoo — such unite with
auxiliary firing.
"Sourco" means any govommental, institutional,
commercial or industrial structure, instxillation,
plant or building that omito or boo tho pot e ntial to
e mit any r e gulated air pollutant und e r th e Act.
"Stock" means a structure that includoo ono or
more fluoo and tho housing for tho fluoa.
"Unit" — meons — a — fossil — fu e l firod — oombuotion
device.
"Utility" moons any person that soils oloctricity.
(34)-
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0403 NEW UNITS EXEMPTION
(a) AppUoabilit)'. Thio Rul e apphoo to any n e w utility unit
that s e p i ' e s on e or more g e n e rators with total nam e plat e
capacity of 25 MWe or loss and bums only fuels with a
sulfur content of 0.05 peroont or loss by weight, oa dotor
min e d for a sampl e of oooh fu e l d e liv e ry using th e m e thods
sp e cifi e d in 40 CFR 73.7(d)3.
(b) Exemption. The designated roprosontative, authorized
in accordance with 40 CFR 72.20, of a facility that includes
unit und e r Paragraph (o) of this Rul e may p e tition the
Dir e ctor for a written exemption for th e unit from o e rtain
roquiromonta of the Acid Rain Program in aooordonco with
4 CFR 72.7.
Statutory A uthority G.S. 143-215.3 (a) (1);
143-215. 107(a)(8); 143-215.108.
.0404 RETIRED UNITS EXEMPTION
(a) Apphoability. This Rul e appli e s to any aff e ot e d unit
that is r e tired prior to tho issuance (including renewal) of a
permit for the unit aa a final action by tho Director.
(b) Ex e mption. TTi e d e signated r e pres e ntativ e , authorized
in aooordano e with 40 CFT^. Part 72, Subpart B, of a facility
that includ e e a unit undor Paragraph (a) of this Rule may
petition tho Director for a written exemption, or to ronow a
1545
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
written oxomption, for tho unit from oortain roquiromonto of
40 CFR Part 72 in aooordanoo with 10 CFR 72.8.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0405 REQUIREMENT TO APPLY
(a) Dut>' to apply. Tho dosignatod roprosontativo of any
facility with an nffoctod unit s hall submit a comploto por mit
application by th e applioablo deadline in Poragrapho (b) and
(o) of thio Rul e . — Tho Own e r or Operator shall not op e rat e
tho facility without a pormit that statoa its Acid Rain
Program roquiromonto.
(b) Dottdlin e o:
fi^ Phao e n. For any faoilit)' with an e xisting unit
under Subparagraph (b)(1) or (2) of Rulo .0101
of this Section, tho dosignatod roprosontativo
ohall oubmit a oompl e to permit applioation
govoming ouoh unit during Phao e II to th e
Diroctor on or befor e :
(A) — Januar)' 1, 1996 for sulfur dioxide;
(B) — Januar>' 1, 199 8 for nitrog e n oxid e s.
(3) Now Units.
(A) — For any facility with a now unit under Part
(b)(3)(A) of Rulo .0 4 01 of this Section, tho
designated r e prooontativ e shall submit a com
pleto pormit applioation gov e rning such unit to
the Diroctor at looot 2 4 months before tho later
of Januar)' 1 , 2000, or tho date on which tho
unit oomm e nooo operation.
tod a timely and complete pormit applioation.
Each f> e rmit iooued in aooordiuic e with thio Rul e
shall hav e a t e rm of five y e ar s oomm e noing on
itfl effective date. — Each p>ermit shall take of foot
by tho later of January' 1 , 2000, or, where the
pormit governs a unit under Subparagraph (b)(3)
of Rul e .0101 of thio Section, tho deadline for
monitor certification under 10 CFR Part 75.
(3) Nitrogen Oxidoo. — Not later than January — ty
IQOOt the Director oboll roopon tho permit te -add
the Aoid Rain Program nitrog e n oxid e s require
monta. Such roopwning shall not affect tho term
of tho aoid rain portion of a oonstruotion and
op e ration p e rmit.
(i) Grandfath e ring of Phas e II Units. — Pursuant te
the — Federal — Register, — vet: — 57, no. — 22 8 , p.
55631, units that moot tho following Phase I
nitrog e n oxides e miosion limitationfl befor e 1997:
fA) — Oi15 Ib/mmBtu for tangontially firod boilers;
(B) — 0.50 Ib/mmBtu for dry bottom wall fired
boiler s ;
ohall b e e x e mpted from any r e vision in e mission
limitations pursuant to S e ction 107(b)(2).
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215. 108.
.0406 REQUIREMENTS FOR PERMIT
APPLICATIONS
A compl e te p e rmit applioation shall contain th e following
(^ — Fef — any — facility — with — a — unit — und e r — Part e l e m e nts in a format to b e tyooifiod by th e Administrator:
(4^ identification of tho affected facility for which tho
permit application is submitted;
id e ntification of e ach unit at tho facility' for which
th e pormit application is submitt e d;
9^
(4>-
(5>-
(b)(3)(B) of Rule .0 4 01, tho designated ropro
sentative shall submit a complete pormit appli
cation govoming ouch unit to th e Dir e ctor at
least 21 months b e for e th e lat e r of January 1 ,
2000, or tho date on which the unit bogins to
serve a generator with a namoplato oapaoity
gr e at e r than 25 MW e .
P) Aoid Rain Compliano e Option D e adlin e s. Th e
doadlinoo for applying for approval of any acid
rain complianco options shall bo tho deadlines
sp e cifi e d in th e r e l e vant s e ct i on of 10 CFTt P art
72, Subpart D and in Section 107 of th e federal
Clean Air Act and regulation s implementing
section 4 07 of tho foderal Cloan Air Act.
(o) Dut)' to R e apply. Tho dooignatod roprosontativo shall
submit a compl e t e p e rmit application fcr e ach facility with
an affected unit at least nine months prior to tho expiration .0407
of an existing pormit governing tho unit during Phase II.
(d) Four copi e s of all p e rmit applications shall b e submit
t e d to th e Director.
(e) — Permit Isouonco Deadline.
(3) a comploto complianco plan for oach unit, in
aooordanoo with 4 CFR Part 72, S ubpart D;
th e standard r e quir e ments under 10 CFR j'art
72.9; and
if tho p e rmit applioation i s for Phase II and tho
unit is a now unit, the date that tho unit ha s
oomm e no e d or will oomm e no e op e ration and th e
d e adline for monitor certification.
w-
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
PERMIT APPLICATION SHIELD AND
BINDING EFFECT OF PERMIT
APPLICATION
(a) Onc e a designat e d r e pr e s e ntativ e submits a tim e ly and
comploto pormit application, tho owner or operator shall bo
On or before Docombor 31, 1997, tho Diroctor doomed in complianco with the roquiromont to have a pormit
und e r 40 CFR 72.9(a) and Paragraph (a) of Rul e .0105 of
this S e ction; provided that any delay in ioouing a permit ««
not caused by tho failure of the designated roprosontativo to
submit in a complete and timoly fashion supplemental
shall issu e a p e rmit for Phas e II for sulfur
dioxid e to e ach aff e ct e d facility in th e Stat e as
set forth in 4 CFR 72.73(a); provided that the
designated roprosontativo for the facility submit
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1546
PROPOSED RULES
informntion, as roquirod by tho Dirootor. noco9sar>' to issue
Q porm rt^
fb^ — Prior to tho oarlior of th e date on whioh a p e rmit is
issued subject to administrative apjXMil or judicial review, an
affootod unit govomod by and of>oratod in aooordiinoo with
th e t e rms and roquir e m e nts of a timely and complet e p e rmit
application shall be de e m e d to b e op e rating in complianc e
with tho Acid Rain Program and this Section.
(c) A complete permit application shall bo binding on tho
ouTiero and operators of th e aff e ct e d faoilit>' and th e aff e ct e d
units oovorod by tho permit application and ohall bo enforce
able OS a p>ormit from the date of submission of tho complete
permit application until the final issuance or denial of a
permit covering tho units and subj e ct to administrativ e
appeal or judicial review.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0408 COMPLIANCE PLANS
For each affected unit included in a p>ormit application, a
compl e te complianc e plan shall follow th e r e quir e ments
und e r — 10 CFR — 73.10 whor e — "p e rmitting authority" — ie
replaced with "Director."
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215. 108.
.0409 PHASE II REP0WT:RING EXTENSIONS
Tho procedures r e quir e d for a r e powering e xt e nsion shall
follow the requirom e nto contain e d in 10 CFR 72. 11 wh e r e
"permitting authority" is replaced with "Diroctor".
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0410 PERMIT CONTENTS
Each p e rmit (including any draft or proposed p e rmit) shal -t
contain th e following e l e m e nts:
f4^ all elements required for a complete permit appli
cation under Rule .0 4 06. as approved or modified
by th e Dir e ctor;
(3) th e applicabl e acid rain e misGionB limitation for
sulfur dioxide; and
(3^ the applicable acid rain emissions limitation for
nitrog e n oxid e s.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215. 108.
.0411 STANDARD REQUIREMENTS
(a) The standard requirements sot forth in Paragraphs (c)
through (i) of this Rule shall bo binding on all owners and
operators (including th e designated r e pr e s e ntativ e ) of the
aff e ct e d facility and aff e ct e d units at th e faoilit)-.
fb) — Except OS provided under 4 CFR 72.22. each
affected facility, including all aff e cted units at the facility,
shall have one and only ono dooignatod roproc i ODtativo, with
regard to all matters under the Aoid Rain Program oonoom
ing th e faoilit>' or any aff e ct e d unit at tho faoilit)' ao pro
vidod in 4 CFR 72.20. — Each submission under tho Acid
Rain Program shall bo submitted, signed, and oortifiod by
the d e signat e d roprecontativ e for all sourc e s on b e half of
which th e submission is mad e in aooordono e with 10 CFR
fe) — Permit Requirements.
fl^ Tli e designat e d r e pr e s e ntativ e of each affootod
faoilit)' and e ach affootod unit at tho facility^
(A) — submit a complete permit application (includ
ing a compliance plan) und e r this Section in
accordono e V i ith the deadlin e s speoifiod in Rulo
.0 4 05;
(^ — submit in a timely manner any supplemental
information that th e Director detormin e o is
n e c e cGOT)' to r e vi e w a p e rmit application and
issue Of deny a pone kt
(5) Tho ovMiors or operators of each affected facility
and e ach aff e cted unit at th e faoilit>' Bhall hav e a
permit and shall operate th e unit in oompliano e
with a complete permit application or a supof
scding permit issued by tho Diroctor.
fd) — Monitoring Requirements.
f4-) Th e own e rs and operators of e ach faoilit)' and
each affected unit at tho facilit)' shall comply
with all applicable monitoring roquiromonto of
40 CFR Part 75 and Section 107 of th e f e d e ral
Cl e an Air Act and rul e s implem e nting Section
4 07 of the federal Cloan Air Act.
(3) The — omissions — measurements — recorded — asd
report e d in acoordono e with 10 CFR Part 75 and
S e ction 407 of tho federal Cl e an i\ir Aot and
rules implementing Section 4 07 of tho fodorol
Clean i\ir Act shall bo used to detormino co a-
pliano e by th e unit with the aoid rain omissions
limitations and emissions reduction r e quir e m e nts
for sulfur dioxide and nitrogen oxides require
monts under the Acid Rain Program.
(3) The requirem e nts of 40 CFR Part 75 and r e gula
tions impl e m e nting Section 407 of th e f e d e ral
Cloan j\ir Aot shall not affect the rosponsibility
of the owners and operator s to monitor omis
sions of other pollutants or oth e r e misoiono
oharaoteriptioo at tho unit und e r other applioablo
rcquircmonts of the Act and other provisions of
tho operating permit for the facility' .
fe) — Sulfur Dioxid e R e quir e m e nts.
fi) Th e own e rs and op e rators of e ach facility' and
oach affected unit at tho facility shall:
(A) — hold allowances, as of the allowanoe transfer
d e adlin e , in th e unit's complianc e oubacoount
(after deductions und e r 10 CFR 73.31(o)) not
less than the total annual omiosions of sulfur
dioxide for the previoua calendar year from the
1547
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
unit; and
(B) ootnply \\\\h the applicable aoid rain e miooion s
limitationo for oulfur dioxide.
(3^ Each ton of sulfiir dioxide omittod in oxcoao of
the acid rain omioaiono limitations for oulfur
dioxide oholl oonotitut e a sopamto violation of
the federal Clean j\ir Act.
(^) An affected unit ohall bo oubjoot to the require
montfl under Subp>amgraph (o)( 1 ) of this Rule ao
follows:
(A) — starting January' — 1, 3000. an aff e cted unit
under Subparagraph (b)(1) or (2) of Rule
■0 4 01;
^fi) — starting on the later of January' 1, 2000, or th e
deadline for monitor o e rtifioation und e r '10
CFR Part 75. an affected unit under Subpara
graph (b)(3) of Rule .0401.
(4) Allowonoeo shall b e h e ld in, deduct e d from, or
transferr e d among Allowanc e Tracking Syst e m
accounts in accordaneo — with the Acid Rain
Program.
(#) An allowance shall not b e d e duct e d, in ord e r to
comply — with — the — requir e m e nts — und e r — Part
(eXlX^) of this Rule, prior to the calendar year
for which the allowance was allocated.
(^ An allowance allocated by th e Administrator
under the Aoid Rain Program is a limit e d autho
rization to emit sulfur dioxide in accordance
with the Acid Rain Program. — No provioion of
the Aoid Rain Program, the p e rmit application,
the permit, or th e p e rmit und e r '10 CFR P art
72.7 and Part 72. 8 and no provision of law shall
bo construed to limit the authority of the United
States to t e rminat e or limit suoh authorization.
(m An allowanc e allocated by th e Administrator
under the Acid Rain Program does not constitute
a property right.
(I) — Nitrogen Qxid e o Roquiromonto. — Th e own e rs and
operators of th e faoilit)' and each aff e ct e d unit at th e faoilit)'
shall comply with the applicable acid rain omissions limitn
tion established by rules implementing Section 407 of the
f e d e ral Clean Air Act, oo modifi e d by a p e rmit application
and a p e rmit in accordanc e with th e r e quir e m e nts of th e
Acid Rain Program.
(g^ — Excess Emissions Requirements. The owners and
op e rators of an aff e ct e d unit that has e xc e ss e missions for
sulfur dioxide or nitrogen oxid e s in any calendar y e ar shall:
fi-) pay without demand the p>onalty required, and
pay upon demand the interest on that penal t)', as
requir e d by '10 CFR Part 77; and
(3) submit a proposed offs e t plan and comply svith
the terms of an approved offset plan, as required
by 4 CFR Part 77.
(h) R e cordk ee ping and R e porting Requir e ments.
fi^ Unl e ss oth e rwis e provid e d, — th e own e rs and
operators of the faciUt)' and each affected unit at
the facility shall keep on site at the facility' each
of the following documents fof a period of five
years from the date the docum e nt io or e ated; this
p e riod may b e e xt e nd e d if th e r e is a change in
applicable roquirentents. at any time prior to the
end of five years, in writing by the Administr a-
tor or Dir e ctor:
(A) — th e c e rtificat e of reprooontation for the dosig
natod roproaontativo fof the facility and cttoh
affected unit at the facility and all documents
that d e monfltrat e th e truth of th e statomonto in
th e o e rtifioat e of reprooontation) in aooordano e
with 4 CFR Part 72.24; provided that the
cortifioatos and documonta shall bo retained on
site at th e faoilit)' boyond ouch fiv e y e ar period
until suoh documents are sup e rs e ded booauoo
of the submission of a new oertifioate of repre
sontation changing the designated represonta
(B) — all e miooions monitoring information, in aooor
danco with 4 CFR Part 75.50(a);
(€) — copies of all reports, complianoo certifications,
and oth e r oubmissiono and all r e cords und e r
th e Aoid Rain Program; and
(©) — copies of all documento used to oomploto a
permit application and any other submissie a
und e r th e Aoid Rain Program or to d e mon
otmte oompUano e with the requir e m e nts of th e
Acid Rain Program.
(3) The designated r epreeontativo shall submit the
r e ports and complianc e o e rtificationo required
und e r th e Aoid Rain Program, including thooo
under 40 CFR Part 72, Subpart I, and 40 CFR
Part 75.
(i) Ex e mpt e d Units.
fl^ Th e ov i Ti e ro and op e rators of oooh unit e x e mpt e d
under Rule .0 4 03 of this Section shall retain at
the facilit)' that include s the unit, the records of
th e r e eultc of th e t e oto required to b e p e rformed
und e r 40 CFR 72.7(d)(2) and a copy of th e
purchas e agreements for the fiiel burned in the
exempted unit, stating the sulfur content of ouch
fu e l. — Suoh r e cords and dooumento shall bo
r e tain e d for fiv e y e ars from th e dat e th e y or e
created.
^3^ On th e earlier of the date the " W ritten exemption
e xpir e s, th e dat e a unit e xempted under Rule
.0403 of this S e ction bums any fu e l with a
sulfur content in excess of 0.05 percent by
weight (as determined in accordance with 4
CFR 72.7(d)(3)), or 34 months prior to th e date
th e unit first serv e s on e or mor e g e n e rators with
a total namoplato oapacit)' in excess of 25 MWe,
the unit ahall no longer bo exempted under Rule
.0403 of this S e ction and shall b e subj e ct to all
r e quir e m e nts of th e Acid Rain Program, e xc e pt
that'
fA3 — Notwithstanding Rule .0405(b) and (c) of this
10:15
NORTH CAROLINA REGISTER
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1548
PROPOSED RULES
Section, tho dooignatod roproeontative of tho
faoilit)' that inoludeo tho unit ohall oubmJt a
oomploto aoid rain p e rmit applioation on th e
JQtor of January' 1. 1998. or tho dnto that tho
unit ia no longer oxomptod under Rule .0 4 03
of thic Sootion; and
(B) — For purpoooD of applying monitoring r e quir e
mcnta under 1 CFR Part 75. the unit shall bo
treated od a new unit that commenced commer
oial operation on the dat e the unit no long e r
nrkX i to tho roquiremonto in Rule .0'103(a) of thio
Section.
(^^ TTio owners and operatora of a unit exempted
under Rule ■OIO'I ohall comply with monitoring
r e quirements in aooordanoo with 40 CFR Part 75
and will bo allocated allowancoa in aooordanco
with 4 CFR Part 73.
(4^ A unit e xempt e d und e r Rule .0104 of this S e e
tion shall not reoum e operation unlooo th e d e oig
natcd roprosontat i vo of tho facility that includes
tho unit submita on Acid Rain permit application
for tho unit not leoe than 21 months prior to th e
later of January 1. 2000. or th e dat e th e unit is
to reaumo operation. — On tho earlier of tho date
tho written exemption oxpireg or tho date on
Ac i d Rain permit applioation is submitt e d or is
requir e d to b e submitt e d und e r this Subpara
graph, the unit shall no longer bo exempted
under Rule .0 4 4 of this Section and shall bo
subj e ct to all r e quirem e nts of 40 CPU Part 72.
(j) Liability^
(4j No ponnit revision shall excuse any violation of
the roquiromenta of tho Acid Rain Program that
occurs prior to tho date that tho revision tak e s
e ff e ct.
(33 Each affected facility and each affected unit shall
moot the requiromonts of the Acid Rain Pro
gram.
(3) Any provision of tho Aoid Rain Program that
applie s to on affected facility shall also apply to
tho owners and op>orators (including tho doaig
nat e d representative) of such facility and of th e
affect e d units at th e facility.
f4) Any provision of tho Acid Rain Program that
applies to on affected unit shall also apply to tho
owTioro and op e rators (including th e d e signat e d
repres e ntativ e ) of such unit. — Exc e pt as provid e d
under Rule .0 4 09 of this Section, and Sections
4 07 of tho federal Clean Air Act. and rules
implementing S e ction 107 of th e federal Clean
Air Act, and e xc e pt with r e gard to th e r e quir e
ments applicable to units with a common stack
under 4 CFR Part 75 (including 4 CFR Parts
75.16. 75.17. and 75.1 8 ). th e ow^n e rs and op e ra
tor s and th e designat e d r e pr e s e ntativ e of one
affected unit shall not be liable for any violation
by any other affected unit of which they are not
ownoro or operators and that is at tho aom e
facility unlooo they ar e own e rs or op e rators of
that facility.
{&) Any violation of a provision of 10 CFR Parta
72, 73, 75, 77, and 7 8 , or rules implomonting
S e otions 407 of th e f e d e ral Clean Air Act by on
affect e d unit, or by on own e r or op e rator or
designated reprosontativo of such unit, shall bo
a separate violat i on.
(k) Effect on Oth e r Authoriti e o. No provision of th e Aoid
Rflin Program, a p e rmit applioation, a p e rmit, or a writt e n
exemption under Rule .0 4 03 and .0 4 4 of this Section shall
bo construed as:
(4) e xcept as e xpressly provid e d in Title IV, ox
e mpting or e xcluding tho owners and operators
of an affected facility or affoctod unit from
compliance with any other provision of tho
f e d e ral Cl e an Air Act, including tho provioiono
of Titl e I of tho federal Cl e an Air Act relating to
applicable national ambient aif quality standards
or state implementation plana;
(3) limiting tho number of ollowanooo a unit oon
hold; provided, that th e numb e r of allowano e o
held by tho unit shall not affoct tho facility's
obligation to comply with any other provisions
of the f e deral Cl e an Air Act or Subchapt e r 2D
of Titl e 15A;
(5) requiring a change of any kind in any State law
regulating electric — utility rates and charges,
aff e cting any State lav . ' regarding such State
r e gulation, or limiting ouch Stat e rul e , including
any prudence roviow requiromonts under such
State law;
f4-) modifying the Federal Power Act or aff e oting
th e authority of th e Fed e ral En e rgy R e gulatory
Commisaion under the Federal Power Act; or
f5) intorforing with or impairing any program fof
oompotitivo bidding for pow e r supply in a Stat e
in which suoh program io e stablished.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.65; 143-215.66; 143-215.108.
.0412 PERMIT SHIELD
Each affected unit opomted in aocordxmco with tho permit
that gov e mc th e unit and that woo iooued in oompliono e with
Titl e IV, as provid e d in this Part, 10 CFR Parts 73, 75, 77,
and 7 8 , and tho rules implomonting Sections 4 07 of tho
fodorol Clean Ait Act, shall bo deemed to bo operating in
oompliano e with th e Acid Rain Program, e xo e pt as provided
in Subparagraph (j)(6) of Rul « .0411 of this S e otion.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0413 PERMIT REVISIONS GENERALLY
(a) Tho permit revision proceduroa shall govern revisions
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NORTH CAROLINA REGISTER
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PROPOSED RULES
to any acid rain portion of any construction and oporation
permit.
(fe) — The p e rmit roviflion proo e dur e o ohall aup e ro e d e th e
pef Hiit revision procoduroo spocifiod in Section .0500 of this
Subchapter — with regard — to revision of any — Acid Rain
Program pormit provioion.
(e^ — A pwrmit rovioion may b e submitt e d for approval at
any time. — No permit revision shall affect the term of the
pormit to bo revised. — No pormit revision shall excuse any
violation of an Aoid Rain Program r e quir e m e nt that oo
ourrod prior to th e e ff e ctive date of the r e s'ioion.
(d) Except for minor pormit modifications or administra -
tive amondmontfl, tho terms of the pormit shall apply while
the pormit rovioion io ponding.
(e) — Any d e t e rmination by th e Director or a Stat e court
modify'ing or voiding any pormit provision shall bo subject
to review by the Administrator in aooordanoo with 40 CFR
70. 8 (0), unl e ao the d e termination or int e rpretation io an
approval and comment during the permit isou
onc e proo e op;
(3) addition of a nitrogen oxid e s alt e rnativ e e m k-
sions limitation demonstration period or a nitro
gen oxides averaging plan to a permit; of
(3) changes in a ropoworing plan, nitrog e n oxidos
av e raging — plan, — nitrog e n — oxid e o — alternative
omiBoiona limitation domonotration period, o r
nitrogen oxides compliance deadline ext e nsion-
Co) P e rmit modifications shall follow tho roquirom e nts of
Ruloo .O'llO and .0412 of this S e ction and S e ction .0500 of
this Subchapter.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0415 FAST-TRACK MODIFICATIONS
All fast track modification s applicabl e to souro e o subject
adminiotmtiv e am e ndm e nt approved in accordance with -Rttle to th e acid rain portion of thi s S e ction oholl follow the
.0 4 16 of this Section.
(f) The standard requirements of 4 CFR Part 72.9 shall
not b e modifi e d or void e d by a p e rmit r e vision.
(g) — i\ny p e rmit r e vision involving incorporation of a
complianco option that was not submitted for approval and
comment during tho perm k-i ssuxmco process, or involving
a chang e — in a complianc e — option that was pr e viously
submitted, shall meet the requir e m e nts for applying for ouch
complianco option under Rule .0409 of this Section and
Section 4 07 of tho federal Clean Air Act and ruloo imple
monting S e ction 407 of th e f e d e ral Cl e an Air Act.
(h) For pormit r e vicions not d e scribed in Rules .0414 and
.0115 of this Section, tho Director may, at his discretion,
determine which of those Rules is applicable.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0414 PERMIT MODinCATIONS
(a) Th e following p e rmit r e visions shall follow th e p e rmit
modification procoduros:
(4^ relaxation of an oxooao emission offset require
ment after approval of th e offset plan by th e
Administrator,
(3) incorporation of a final nitrogen oxides altema
tive emission limitation following a domonstra
tion period, or
(3) determination of whether — e fforts — to d e sign.
prooedureo given in 4 CFR 72. 8 where "permitting
authority" shall be replaced with "Director".
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0416 ADMINISTRATIVE FERMTT AMENDMENT
(a) Th e following r e visions to tho acid rain portion of the
permit shall follow tho administrative pormit amondmont
prooedureo!
ft) activation of a complianc e option conditionally
approv e d by the Director, provid e d that all
foquiromonts for activation under 40 CFR Part
72, Subpart D, are mot;
(3) chang e s in th e d e signat e d r e pr e s e ntativ e or
alternative dooignatod r e pr e s e ntativ e , provided
that a new certificate of representation is submit
fryj.
(3) correction of typographical e rror s ;
(4) changes in nam e s, addr e ss e s, or t e l e phone or
facsimile numbers;
(^) ohangeo in the owners or operators, provided
that a n e w c e rtificat e of r e pr e s e ntation is oubmit
t e d within 30 days; and
(6) termination of a compliance option in the per
mit, provided that thi s procedure shall not bo
us e d to terminate a r e pow e ring plan aft e r D e
comber 31, 1999.
(b) — Administrative amondmonts shall follow tho proco
duros sot forth under Section .0500 of this Subchapter
construct, and teat ropoworing technology under
a ro[x)woring extension plan were in good faith
and wh e th e r ouch ropow e ring t e chnology was e xcept that ownership chang e s under Subparagraph (a)(5) of
prop e rly construct e d and t e st e d under 40 CFR
72.11(g)(l)(i)and(2).
(b) The following [>ormit revisions shall follow either the
permit modification proc e dur e s or the fast tmok modification
proc e dur e s und e r Rul e .0415 of this S e ction:
(4^ i ncorporation of a complianco option that the
designated representative did not submit for
this Rul e shall follow the proc e dures under Rul e .0524 of
this Subchapter.
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0417 AUTOMATIC PERMIT AMENDMENT
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PROPOSED RULES
Tho following pwrmit roviaions shall be doomod to amend
automalioally, and booomo a part of, the aff e oted unit's
ponnit by op e ration of law without any furth e r r e vi e w:
(4^ upon rooordfltion by tho Administrator undor 4
CFR Part 73 all allowanoo allooationfl to, tronafors
to. and d e duotiono from on affect e d unit's Allow
ano e Tracking System account; and
(5) incorporation of an offoot plan that has boon
approved by tho Administrator under 4 CFR Part
Statutory Authority G.S. 143-215. 3(a)(1);
143-215. 107(a)(8); 143-215.108.
.0418 PERMIT REOPENINGS
(a) As provided in Soction .0500 of this Subchapter, tho
Dirootor shall roopon a permit for roooons spocifiod in Rulo
.0517 of this Subchapter, including wh e n e v e r additional
requir e m e nts b e com e applicab le to any affect e d unit gov
omod by tho permit.
(b) Uf>on reopening a permit for reasons spocificd in Rulo
.0517 of this Subchapter, th e Dir e ctor shall issu e a draft
pormit changing tho provioionD, or adding the r e quirem e nto,
for which the rcopwning was necessary.
(e) — As nocegaar)'. tho Director shall roopon a permit to
inoorporato nitrog e n oxidoo roquir e m e nto, oonoiotont with
S e ction 107 of tho federal Cl e an Air Act and rul e s impl e
menting Section 4 07 of tho federal Clean Air Act.
(d) j\ny reopening of a pormit shall not affoot tho term o f
th e p e rrH ttr
Statutory Authority G. S.
143-215. 107(a)(8); 143-215.108.
143-215. 3(a)(1);
Notice is hereby given in accordance with G.S.
150B-21.2 that the EHNR - NC Marine Fisheries
Convnission intends to adopt temporary and permanent rules
establishing the procedures and conditions which will be
used to issue proclamations closing or restricting the harvest
offish in areas of coastal waters which are the subject of
warnings or advisories by the State Health Director con-
cerned with dangers or risks to public health or safety from
the consumption offish taken from those areas. During the
next several weeks, the Marine Fisheries Commission will be
drafting criteria in cooperation with the State Health
Director and scientific experts for deciding when closures
are necessary and when reopening the areas should be
considered. The agency will subsequently publish in the
Register the text of the rule(s) it proposes to adopt as a
result of the public hearing and of any comments received on
the subject matter.
Proposed Effective Date: March 1, 1996.
A Public Hearing will be conducted at 7:00 p.m. on
November 21, 1995 at the Grover C. Fields Middle School,
2000 Clarendon Blvd. , New Bern, NC.
Reason for Proposed Action: Adoption of this Rule will
establish a procedure for prohibiting or restricting the taking
offish from areas where the toxic dinqflagellate Pfiesteria
piscimorte is present and is killing fish. The effects this
substance might have on humans is unknown. The MFC will
be drc^iing criteria for these actions and intends to adopt a
temporary rule at the November 30 - December 1 Marine
Fisheries Commission Business Meeting establishing these
procedures.
Comment Procedures: Comments and statements, both
written and oral, may be presented at the hearing. Written
comments are encouraged and may be submitted to the
Marine Fisheries Commission, P.O. Box 769, Morehead
City, NC 28557. These written and oral comments must be
received no later than 8:00 a.m. , December 1, 1995. Oral
presentation lengths may be limited depending on the
number of people that wish to speak at the public hearings.
Notice is hereby given in accordance with G.S.
150B-21.2 that the EHNR - NC Marine Fisheries
Commission intends to adopt rule cited as 15A NCAC 3J
.0403.
Temporary: TJiis Rule was filed as a temporary rule
effective October 16, 1995 for a period of 180 days or until
the permanent rule becomes effective, whichever is sooner.
Proposed Effective Date: March 1, 1996.
A Public Hearing will be conduaed at 7:(X) p.m. on
November 21, 1995 at the Grover C. Fields Middle School,
2000 Clarendon Blvd. , New Bern, NC.
Reason for Proposed Action: Adoption of this Rule will
close a portion of the Neuse River to the taking of all marine
and e.stuarine resources by any method. This closure is
necessary because of the presence of Pfiesteria piscimorte,
a toxic dinoflagellate which has caused fish kills and the
unknown affects it has on humans.
Comment Procedures: Comments and statements, both
written and oral, may be presented at the hearing. Written
comments are encouraged and may be submitted to the
Marine Fisheries Commission, P. O. Box 769, Morehead
City, NC 28557. These written and oral comments must be
received no later than 8:00 a.m. , December 1, 1995. Oral
presentation lengths may be limited depending on the
number of people that wish to speak at the public hearings.
Fiscal Note: This Rule does not affea the expenditures or
revenues of local government or state funds.
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NORTH CAROLINA REGISTER
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PROPOSED RULES
CHAPTER 3 - MARINE nSHERIES
SUBCHAPTER 3J - NETS, POTS, DREDGES, AND
OTHER nSHING DEVICES
SECTION .0400 - nSHING GEAR
.0403 NEUSE RTVER AND ITS TRIBUTARIES
(a) It is unlawful to possess, sell, or take fish by any
method from the Neuse River and its tributaries upstream of
a line from Slocum Creek to Beard Creek, until the Fisher-
ies Director, by proclamation, opens the area or any portion
thereof to the harvest of fish.
(h) The Fisheries Director shall issue a proclamation
opening the area after consultation with the State Health
Director and scientific experts working on the dinoflapellate
Pfiesteria piscimorte and the Marine Fisheries Commission
Chairman.
(c) The Fisheries Director may, after prior consent of the
Marine Fisheries Commission, by proclamation close the
areas or a portion thereof described in Paragraph (a) of this
Rule, for which a subsequent health advisory is issued by
the State Health Director.
Statutory Authority G.S. ] 13-134; 113-182; 113-221;
143B-289.4.
interpretations.
ISA NCAC 7H .2301 - .2305 - The new general permit wUl
allow expedited approval of proposals to replace existing
bridges and culverts across streams in the coastal zone.
The permit will be applied to projects within certain parame-
ters of size, wetland impacts, etc. The parameters have
been developed from a review of past permit decisions. It is
projected that the new general permit will be used approxi-
mately six times per year to approve projects, proposed by
the Dept. of Transportation. It will also apply to private
projects. There is a need to expedite review and approval
of routine impacts on Coastal Resources.
Comment Procedures: All persons interested in this matter
are invited to attend the public hearing. The Coastal
Resources Commission will receive mailed written comments
postmarked no later than December 1, 1995. Any person
desiring to present lengthy comments is requested to submit
a written statement for inclusion in the record of proceedings
at the public hearing. Additional irformation concerning the
hearing or the proposals may be obtained by contacting Kris
M. Norton, Division of Coastal Management, PO Box
27687, Raleigh, NC 27611-7687, (919) 733-2293.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government funds.
******************
CHAPTER 7 - COASTAL MANAGEMENT
Notice is hereby given in accordance with G.S.
150B-21.2 that the EHNR - Coastal Resources Com-
mission intends to amend rules cited as 15 A NCAC 7H
.0208, .0305, .0308, and adopt 15A NCAC 7H .2301 -
.2305. (The text in BOLD in 15A NCAC 7H .0208 pub-
lished in Volume 10, Issue 3, pages 197 - 204.)
Proposed Effective Date: March 1, 1996.
A Public Hearing will be conducted at 4:00 p.m. on
November 16, 1995 at the Ramada Inn. 1701 South Virginia
Dare Trail, Kill Devil Hills, NC.
Reason for Proposed Action:
ISA NCAC 7H .0208 - Strict application of current CRC
rules would prevent issuing permits for these development
proposals. Historically , the permits have been issued in
absence of review agency objections. The new rule will
correct this inconsistency.
ISA NCAC 7H .0305 & .0308 - The proposed rules are
necessary to codify the CRC 's position on how to measure
the first line of stable natural vegetation (FLSNV) on ocean
beaches that have been replenished with sand. The FLSNV
is the baseline used for setback of structures on the beaches.
Past interpretations of the current definition have been to
use the vegetation line that existed prior to the nourishment
projea. A recent contested case has focussed on the need
to have the rules amended to reflect the intent of past
SUBCHAPTER 7H - STATE GUIDELINES
FOR AREAS OF ENVIRONMENTAL CONCERN
SECTION .0200 - THE ESTUARINE SYSTEM
.0208 USE STANDARDS
(a) General Use Standards
(1) Uses which are not water dependent will not be
permitted in coastal wetlands, estuarine waters,
and public trust areas. Restaurants, residences,
apartments, motels, hotels, trailer parks, private
roads, factories, and parking lots are examples
of uses that are not water dependent. Uses that
are water dependent may include: utility ease-
ments; docks; wharfs; boat ramps; dredging;
bridges and bridge approaches; revetments,
bulkheads; culverts; groins; navigational aids;
mooring pilings; navigational channels; simple
access channels and drainage ditches.
(2) Before being granted a permit by the CRC or
local permitting authority, there shall be a
finding that the applicant has complied with the
following standards:
(A) The location, design, and need for develop-
ment, as well as the construction activities
involved must be consistent with the stated
management objective.
(B) Before receiving approval for location of a use
10:15
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November 1, 1995
1552
PROPOSED RULES
or development within these AECs, the per-
mit-letting authority shall find that no suitable
alternative site or location outside of the AEC
exists for the use or development and, further,
that the applicant has selected a combination of
sites and design that will have a minimum
adverse impact upon the productivity and
biologic integrity of coastal marshland, shell-
fish beds, beds of submerged aquatic vegeta-
tion, spawning and nursery areas, important
nesting and wintering sites for waterfowl and
wildlife, and important natural erosion barriers
(cypress fringes, marshes, clay soils).
(C) Development shall not violate water and air
quality standards.
(D) Development shall not cause major or irrevers-
ible damage to valuable documented archaeo-
logical or historic resources.
(E) Development shall not measurably increase
sillation.
(F) Development shall not create stagnant water
bodies.
(G) Development shall be timed to have minimum
adverse significant affect on life cycles of
estuarine resources.
(H) Development shall not impede navigation or
create undue interference with access to, or
use of, public trust areas or estuarine waters.
(3) When the proposed development is in conflict
with the general or specific use standards set
forth in this Rule, the CRC may approve the
development if the applicant can demonstrate
that the activity associated with the proposed
project will have public benefits as identified in
the findings and goals of the Coastal Area
Management Act, that the public benefits clearly
outweigh the long range adverse effects of the
project, that there is no reasonable and prudent
alternate site available for the project, and that
ail reasonable means and measures to mitigate
adverse impacts of the project have been incor-
porated into the project design and will be
implemented at the applicant's expense. These
measures taken to mitigate or minimize adverse
impacts may include actions that will:
(A) minimize or avoid adverse impacts by limiting
the magnitude or degree of the action;
(B) restore the affected environment; or
(C) compensate for the adverse impacts by replac-
ing or providing substitute resources.
(4) Primary nursery areas are those areas in the
estuarine system where initial post larval devel-
opment of finfish and crustaceans takes place.
They are usually located in the uppermost sec-
tions of a system where populations are uni-
formly early juvenile stages. They are officially
designated and described by the N.C. Marine
Fisheries Commission in 15A NCAC 3B .1405
and by the N.C. Wildlife Resources Commission
in 15A NCAC IOC .0110.
(5) Outstanding Resource Waters are those estuarine
waters and public trust areas classified by the
N.C. Environmental Management Commission
pursuant to Title 15A, Subchapter 2B .0216 of
the N.C. Administrative Code as Outstanding
Resource Waters (ORW) upon fmding that such
waters are of exceptional state or national recre-
ational or ecological significance. In those
estuarine waters and public trust areas classified
as ORW by the Environmental Management
Commission (EMC), no permit required by the
Coastal Area Management Act will be approved
for any project which would be inconsistent with
applicable use standards adopted by the CRC,
EMC, or Marine Fisheries Commission (MFC)
for estuarine waters, public trust areas, or
coastal wetlands. For development activities not
covered by specific use standards, no permit will
be issued if the activity would, based on site
specific information, materially degrade the
water quality or outstanding resource values
unless such degradation is temporary.
(6) Beds of submerged aquatic vegetation (SAV) are
those habitats in public trust and estuarine waters
vegetated with one or more species of
submergent vegetation. These vegetation beds
occur in both subtidal and intertidal zones and
may occur in isolated patches or cover extensive
areas. In either case, the bed is defined by the
presence of above-ground leaves or the be-
low-ground rhizomes and propagules. In defin-
ing SAVs, the CRC recognizes the Aquatic
Weed Control Act of 1991 (G.S. 113A-220 et.
seq.) and does not intend the SAV definition and
its implementing rules to apply to or conflict
with the non-development control activities
authorized by that Act.
(b) Specific Use Standards
(1) Navigation channels, canals, and boat basins
must be aligned or located so as to avoid pri-
mary nursery areas highly productive shellfish
beds, beds of submerged aquatic vegetation, or
significant areas of regularly or irregularly
flooded coastal wetlands.
(A) Navigation channels and canals may be al-
lowed through narrow fringes of regularly and
irregularly flooded coastal wetlands if the loss
of wetlands will have no significant adverse
impacts on fishery resources, water quality or
adjacent wetlands, and, if there is no reason-
able alternative that would avoid the wetland
losses.
(B) All spoil material from new construction shall
be confined landward of regularly and irregu-
1553
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
^
\
)
larly flooded coastal wetlands and stabilized to
prevent entry of sediments into the adjacent
water bodies or marsh.
(C) Spoil from maintenance of channels and canals
through irregularly flooded wetlands shall be
placed on non-wetland areas, remnant spoil
piles, or disposed of by an acceptable method
having no significant, long term wetland
impacts. Under no circumstances shall spoil
be placed on regularly flooded wetlands.
(D) Widths of the canals and channels shall be the
minimum required to meet the applicant's
needs and provide adequate water circulation.
(E) Boat basin design shall maximize water ex-
change by having the widest possible op>ening
and the shortest practical entrance canal.
Depths of boat basins shall decrease from the
waterward end inland.
(F) Any canal or boat basin shall be excavated no
deeper than the depth of the connecting chan-
nels.
(G) Canals for the purpose of multiple residential
development shall have:
(i) no septic tanks unless they meet the stan-
dards set by the Division of Environmental
Management and the Division of Environ-
mental Health;
(ii) no untreated or treated point source dis-
charge;
(iii) storm water routing and retention areas
such as settling basins and grassed swales.
(H) Construction of finger canal systems will not
be allowed. Canals shall be either straight or
meandering with no right angle comers.
(I) Canals shall be designed so as not to create an
erosion hazard to adjoining property. Design
may include bulkheading, vegetative stabiliza-
tion, or adequate setbacks based on soil char-
acteristics.
(J) Maintenance excavation in canals, channels
and boat basins within primary nursery areas
and beds of submerged aquatic vegetation
should be avoided. However, when essential
to maintain a traditional and established use,
maintenance excavation may be approved if the
applicant meets all of the following criteria as
shown by clear and convincing evidence ac-
companying the jjermit application. This Rule
does not affect restrictions placed on permits
issued after March 1, 1991.
(i) The applicant demonstrates and documents
that a water-dependent need exists for the
excavation; and
(ii) There exists a previously permitted chan-
nel which was constructed or maintained
under permits issued by the State or Fed-
eral government. If a natural channel was
in use, or if a human-made channel was
constructed before permitting was neces-
sary, there must be clear evidence that the
channel was continuously used for a spe-
cific purpose; and
(iii) Excavated material can be removed and
placed in an approved disposal area with-
out significantly impacting adjacent nurs-
ery areas and beds of submerged aquatic
vegetation; and
(iv) The original depth and width of a hu-
man-made or natural channel will not be
increased to allow a new or expanded use
of the channel.
(2) Hydraulic Dredging
(A) The terminal end of the dredge pipeline shall
be positioned at a distance sufficient to pre-
clude erosion of the containment dike and a
maximum distance from spillways to allow
adequate settlement of suspended solids.
(B) Dredge spoil must be either confined on high
ground by adequate retaining structures or if
the material is suitable, deposited on beaches
for purposes of renourishment, with the excep-
tion of (G) of this Subsection (b)(2).
(C) Confinement of excavated materials shall be on
high ground landward of regularly and irregu-
larly flooded marshland and with adequate soil
stabilization measures to prevent entry of
sediments into the adjacent water bodies or
marsh.
(D) Effluent from diked areas receiving disposal
from hydraulic dredging operations must be
contained by pipe, trough, or similar device to
a point waterward of emergent vegetation or,
where local conditions require, below mean
low water.
(E) When possible, effluent from diked disposal
areas shall be returned to the area being
dredged.
(F) A water control structure must be installed at
the intake end of the effluent pipe.
(G) Publicly funded projects will be considered by
review agencies on a case-by-case basis with
respect to dredging methods and spoil disposal.
(H) Dredge spoil from closed shellfish waters and
effluent from diked disposal areas used when
dredging in closed shellfish waters shall be
returned to the closed shellfish waters.
(3) Drainage Ditches
(A) Drainage ditches located through any marsh-
land shall not exceed six feet wide by four feet
deep (from ground surface) unless the appli-
cant shows that larger ditches are necessary for
adequate drainage.
(B) Spoil derived from the construction or mainte-
nance of drainage ditches through regularly
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1554
PROPOSED RULES
flooded marsh shall be placed landward of
these marsh areas in a manner that will insure
that entry of sediment into the water or marsh
will not occur. Spoil derived from the con-
struction or maintenance of drainage ditches
through irregularly flooded marshes shall be
placed on nonwetlands wherever feasible.
Non-wetland areas include relic disposal sites.
(C) Excavation of new ditches through high ground
shall take place landward of a temporary
earthen plug or other methods to minimize
siltation to adjacent water bodies.
(D) Drainage ditches shall not have a significant
adverse effect on primary nursery areas,
productive shellfish beds, beds of submerged
aquatic vegetation, or other documented im-
portant estuarine habitat. Particular attention
shall be placed on the effects of freshwater
inflows, sediment, and nutrient Introduction.
Settling basins, water gates, retention struc-
tures are examples of design alternatives that
may be used to minimize sediment introduc-
tion.
(4) Nonagricultural Drainage
(A) Drainage ditches shall be designed so that
restrictions in the volume or diversions of flow
are minimized to both surface and ground
water.
(B) Drainage ditches shall provide for the passage
of migratory organisms by allowing free
passage of water of sufficient depth.
(C) Drainage ditches shall not create stagnant
water pools or significant changes in the
velocity of flow.
(D) Drainage ditches shall not divert or restrict
water flow to important wetlands or marine
habitats.
(5) Marinas. Marinas are defined as any publicly or
privately owned dock, basin or wet boat storage
facility constructed to accommodate more than
10 boats and providing any of the following
services: permanent or transient docking spaces,
dry storage, fueling facilities, haulout facilities
and repair service. Excluded from this defini-
tion are boat ramp facilities allowing access
only, temporary docking and none of the preced-
ing services. Expansion of existing facilities
shall also comply with these standards for all
development other than maintenance and repair
necessary to maintain previous service levels.
(A) Marinas shall be sited in non-wetland areas or
in deep waters (areas not requiring dredging)
and shall not disturb valuable shallow water,
submerged aquatic vegetation, and wetland
habitats, except for dredging necessary for
access to high-ground sites. The following
four alternatives for siting marinas are listed in
order of preference for the least damaging
alterative; marina projects shall be designed to
have the highest of these four priorities that is
deemed feasible by the permit letting agency:
(i) an upland basin site requiring no alteration
of wetland or estuarine habitat and provid-
ing adequate flushing by tidal or wind
generated water circulation;
(ii) an upland basin site requiring dredging for
access when the necessary dredging and
operation of the marina will not result In
the significant degradation of existing
fishery, shellfish, or wetland resources and
the basin design shall provide adequate
flushing by tidal or wind generated water
circulation;
(iii) an open water site located outside a pri-
mary nursery area which utilizes piers or
docks rather than channels or canals to
reach deeper water; and
(iv) an open water marina requiring excavation
of no intertidal habitat, and no dredging
greater than the depth of the connecting
channel.
(B) Marinas which require dredging shall not be
located in primary nursery areas nor in areas
which require dredging through primary nurs-
ery areas for access. Maintenance dredging in
primary nurseiy areas for existing marinas will
be considered on a case-by-case basis.
(C) To minimize coverage of public trust areas by
docks and moored vessels, dry storage marinas
shall be used where feasible.
(D) Marinas to be developed In waters subject to
public trust rights (other than those created by
dredging upland basins or canals) for the
purpose of providing docking for residential
developments shall be allowed no more than
27 sq. ft. of public trust areas for every one
lin. ft. of shoreline adjacent to these public
trust areas for construction of docks and moor-
ing facilities. The 27 sq. ft. allocation shall
not apply to fairway areas between parallel
piers or any portion of the pier used only for
access from land to the docking spaces.
(E) To protect water qiulity of shellfishlng areas,
marinas shall not be located within areas
where shellfish harvesting for human consump-
tion is a significant existing use or adjacent to
such areas if shellfish harvest closure is antici-
pated to result from the location of the marina.
In compliance with Section 101(a)(2) of the
Clean Water Act and North Carolina Water
Quality Standards adopted pursuant to that
section, shellfish harvesting is a significant
existing use if it can be established that shell-
fish have been regularly harvested for human
1555
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
consumption since November 28, 1975 or that
shellfish apparently are propagating and sur-
viving in a biologically suitable habitat and are
available and suitable for harvesting for the
purpose of human consumption. The Division
of Marine Fisheries shall be consulted regard-
ing the significance of shellfish harvest as an
existing use and the magnitude of the quantities
of shellfish which have been harvested or are
available for harvest in the area where harvest
will be affected by the development.
(F) Marinas shall not be located without written
consent from the controlling parties in areas of
submerged lands which have been leased from
the state or deeded by the state.
(G) Marina basins shall be designed to promote
flushing through the following design criteria:
(i) the basin and channel depths shall gradu-
ally increase toward open water and shall
never be deeper than the waters to which
they connect; and
(ii) when possible, an opening shall be pro-
vided at opfKJsite ends of the basin to
establish flow-through circulation.
(H) Marinas shall be designed to minimize adverse
effects on navigation and public use of public
trust areas while allowing the applicant ade-
quate access to deep waters.
(I) Marinas shall be located and constructed so as
to avoid adverse impacts on navigation
throughout all federally maintained chaimels
and their immediate boundaries. This includes
mooring sites (permanent or temporary), speed
or traffic reductions, or any other device,
either physical or regulatory, that may cause a
federally maintained channel to be restricted.
(J) Open water marinas shall not be enclosed
within breakwaters that preclude circulation
sufficient to maintain water quality.
(K) Marinas which require dredging shall provide
acceptable areas to accommodate disposal
needs for future maintenance dredging. Proof
of the ability to truck the spoil material from
the marina site to an acceptable disposal area
will be acceptable.
(L) Marina design shall comply with all applicable
requirements for management of stormwater
runoff.
(M) Marinas shall post a notice prohibiting the
discharge of any waste from boat toilets and
explaining the availability of information on
local pump-out services.
(N) Boat maintenance areas must be designed so
that all scraping, sandblasting, and painting
will be done over dry land with adequate
containment devices to prevent entry of waste
materials into adjacent waters.
(O) All marinas shall comply with all applicable
standards for docks and piers, bulkheading,
dredging and spoil disposal.
(P) All applications for marinas shall be reviewed
to determine their potential impact and compli-
ance with applicable standards. Such review
shall consider the cumulative impacts of ma-
rina development.
(Q) Replacement of existing marinas to maintain
previous service levels shall be allowed pro-
vided that the preceding rules are complied
with to the maximum extent possible, with due
consideration being given to replacement costs,
service needs, etc.
(6) Docks and Piers
(A) Docks and piers shall not significantly interfere
with water flows.
(B) To preclude the adverse effects of shading
coastal wetlands vegetation, docks and piers
built over coastal wetlands shall not exceed six
feet in width. "T"s and platforms associated
with residential piers must be at the waterward
end, and must not exceed a total area of 500
sq. ft. with no more than six feet of the di-
mension perpendicular to the marsh edge
extending over coastal wetlands. Water de-
pendent projects requiring piers or wharfs of
dimensions greater than those stated in this
Rule shall be considered on a case-by-case
basis.
(C) Piers shall be designed to minimize adverse
effects on navigation and public use of waters
while allowing the applicant adequate access to
deep waters by:
(i) not extending beyond the established pier
length along the same shoreline for similar
use; (This restriction shall not apply to
piers 200 feet or less in length unless
necessary to avoid unreasonable interfer-
ence with navigation or other uses of the
waters by the public);
(ii) not extending into the channel portion of
the water body; and
(iii) not extending more than one-third the
width of a natural water body or
man-made canal or basin. Measurements
to determine widths of the channels, canals
or basins shall be made from the
waterward edge of any coastal wetland
vegetation which borders the water body.
The one-third length limitation will not
apply in areas where the U.S. Army Corps
of Engineers, or a local government in
consultation with the Corps of Engineers,
has established an official pier-head line.
(D) Pier alignments along federally maintained
channels must meet Corps of Engineers Dis-
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1556
PROPOSED RULES
trict guidelines.
(E) Piers shall not interfere with the access to any
riparian property and shall have a minimum
setback of 15 feet between any part of the pier
and the adjacent property owner's areas of
riparian access. The line of division of areas
of riparian access shall be established by
drawing a line along the channel or deep water
in front of the properties, then drawing a line
perpendicular to the line of the channel so that
it intersects with the shore at the point the
upland property line meets the water's edge.
The minimum setback provided in the rule
may be waived by the written agreement of the
adjacent riparian owner(s) or when two adjoin-
ing riparian owners are co-applicants. Should
the adjacent property be sold before construc-
tion of the pier commences, the applicant shall
obtain a written agreement with the new owner
waiving the minimum setback and submit it to
the permitting agency prior to initiating any
development of the pier. Application of this
Rule may be aided by reference to an ap-
proved diagram illustrating the rule as applied
to various shoreline configurations. Copies of
the diagram may be obtained from the Division
of Coastal Management. When shoreline
configuration is such that a perpendicular
alignment cannot be achieved, the pier shall be
aligned to meet the intent of this Rule to the
maximum extent practicable.
(F) Docks and piers shall not significantly interfere
with shellfish franchises or leases. Applicants
for authorization to construct a dock or pier
shall provide notice of the permit application
or exemption request to the owner of any part
of a shellfish franchise or lease over which the
proposed dock or pier would extend.
(7) Bulkheads and Shore Stabilization Measures
(A) Bulkhead alignment, for the purpose of shore-
line stabilization, shall approximate mean high
water or normal water level.
(B) Bulkheads shall be constructed landward of
significant marshland or marshgrass fringes.
(C) Bulkhead fill material shall be obtained from
an approved upland source, or if the bulkhead
is a part of a permitted project involving
excavation from a non-upland source, the
material so obtained may be contained behind
the bulkhead.
(D) Bulkheads or other structures employed for
shoreline stabilization shall be j>ennitted below
approximate mean high water or normal water
level only when the following standards are
met:
(i) the property to be bulkheaded has an
identifiable erosion problem, whether it
results from natural causes or adjacent
bulkheads, or it has unusual geographic or
geologic features, e.g. steep grade bank,
which will cause the applicant unreason-
able hardship under the other provisions of
this Rule;
(ii) the bulkhead aligimient extends no further
below approximate mean high water or
normal water level than necessary to allow
recovery of the area eroded in the year
prior to the date of application, to align
with adjacent bulkheads, or to mitigate the
unreasonable hardship resulting from the
unusual geographic or geologic features;
(iii) the bulkhead alignment will not result in
significant adverse impacts to public trust
rights or to the property of adjacent ripar-
ian owners;
(iv) the need for a bulkhead below approximate
mean high water or normal water level is
documented in the Field Investigation
Report or other reports prepared by the
Division of Coastal Management; and
(v) the property to be bulkheaded is in a
nonoceanfront area.
(E) Where possible, sloping rip-rap, gabions, or
vegetation shall be used rather than vertical
seawalls.
(8) Beach Nourishment
(A) Beach creation or maintenance may be allowed
to enhance water related recreational facilities
for public, commercial, and private use.
(B) Beaches may be created or maintained in areas
where they have historically been found due to
natural processes. They wiU not be allowed in
areas of high erosion rates where frequent
maintenance will be necessary.
(C) Placing unconfined sand material in the water
and along the shoreline will not be allowed as
a method of shoreline erosion control.
(D) Material placed in the water and along the
shoreline shall be clean sand free from pollut-
ants and highly erodible finger material. Grain
size shall be equal to or larger than that found
naturally at the site.
(E) Material from dredging projects can be used
for beach nourishment if:
(i) it is first handled in a manner consistent
with rules governing spoil disp>osal;
(ii) it is allowed to dry for a suitable period;
and
(iii) only that material of acceptable grain size
is removed from the disposal site for
placement on the beach. Material shall
not be placed directly on the beach by
dredge or dragline during maintenance
excavation.
1557
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
^
\
\
(F) Beach creation shall not be allowed in any
primary nursery areas, nor in any areas where
siltation from the site would pose a threat to
shellfish beds.
(G) Material shall not be placed on any coastal
wetlands or beds of submerged aquatic vegeta-
tion.
(H) Material shall not be placed on any submerged
bottom with significant shellfish resources.
(I) Beach construction shall not create the poten-
tial for filling adjacent or nearby navigation
channels, canals, or boat basins.
(J) Beach construction shall not violate water
quality standards.
(K) Permit renewal of these projects shall require
an evaluation of any adverse impacts of the
original work.
(L) Permits issued for this development shall be
limited to authorizing beach nourishment only
one time during the Ufe of the permit. Permits
may be renewed for maintenance work or
repeated need for nourishment.
(9) Wooden and Riprap Groins
(A) Groins shall not extend more than 25 ft.
waterward of the mean high water or normal
water level unless a longer structure is justified
by site specific conditions, sound engineering
and design principals.
(B) Groins shall be set back a minimum of 15 ft.
from the adjoining property lines. This set-
back may be waived by written agreement of
the adjacent riparian owner(s) or when two
adjoining riparian owners are co-applicants.
Should the adjacent property be sold before
construction of the groin commences, the
apphcant shall obtain a written agreement with
the new owner waiving the minimum setback
and submit it to the permitting agency prior to
initiating any development of the groin.
(C) Groins shall pose no threat to navigation.
(D) The height of groins shall not exceed 1 ft.
above mean high water or the normal water
level.
(E) No more than two structures shall be allowed
per 100 ft. of shoreline unless the applicant
provides evidence that more structures are
needed for shoreline stabilization.
(F) "L" and "T" sections shall not be allowed at
the end of groins.
(G) Riprap material used for groin construction
shall be free from loose dirt or any other
pollutant in other than non-harmful quantities
and of a size sufficient to prevent its move-
ment from the site by wave and current action.
(10) "Free Standing Moorings"
(A) A "free standing mooring" is any means to
attach a ship, boat, vessel, floating structure
or other water craft to a stationary under-
water device, mooring buoy, buoyed anchor.
or piling (as long as the piling is not associ-
ated with an existing or proposed pier,
dock, or boathouse).
(B) Free standing moorings shall be permitted
only:
ii) to riparian property owners within their
riparian corridors; or
(ii) as a publicly sponsored project provid-
ing a suitable area for access to any
mooring(s) and other land based opera-
tions which shall include but not be
limited to wastewater pump out, trash
disposal and vehicle parking.
(C) To protect water quality of shellfishing
areas, mooring fields shall not be located
yyithin areas where shellfish harvesting for
human consumption is a significant existing
use or adjacent to such areas if shellfish
harvest closure is anticipated to result from
the location of the mooring field. In compli-
ance with Section 101(a)(2) of the Federal
Water Pollution Control Act. 33 U.S.C.
1251 (a)(2). and North Carolina Water
Quality Standards adopted pursuant to that
section, shellfish harvesting is a significant
existing use if it can be established that
shellfish have been regularly harvested for
human consumption since November 28.
1975 or that shellfish apparently are propa-
gating and surviving in a biologically suit-
able habitat and are available and suitable
for harvesting for the purpose of human
consumption. The Division of Marine Fish-
eries shall be consulted regarding the signifi-
cance of shellfish harvest as an existing use
and the magnitude of the quantities of
shellfish which have been harvested or are
available for harvest in the area where
harvest will be affected by the development.
(D) Moorings shall not be located without writ-
ten consent from the controlling parties in
areas of submerged lands which have been
leased from the state or deeded by the state.
(E) Moorings shall be designed and maintained
to minimize adverse effects on navigation
and public use of public trust areas while
allowing the a pplicant adequate access to
deep waters.
(F) Moorings shall be located and constructed
so as to avoid adverse impacts on navigation
throughout all federally maintained channels
and their immediate boundaries. This
includes mooring sites (permanent or tempo-
rary), speed or traffic reductions, or any
other device, either physical or regulatory.
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1558
PROPOSED RULES
that may cause a federally maintained chan-
nel to be restricted.
(G) Open water moorings shall not be enclosed
within breakwaters that preclude circulation
sufficient to maintain water quality.
(H) Moorings and the associated land based
operation design shall comply with all appli-
cable requirements for management of
stormwater runoff.
(D Mooring fields shall have posted in view of
patrons a notice prohibiting the discharge of
any waste from boat toilets or any other
discharge and explaining the availability of
information on local pump-out services and
waste disposal.
(.D All a pplications for moorings shall be re-
viewed to determine their potential impact
and compliance with a pplicable standards.
Such review shall consider the cumulative
impacts of moorings development.
(K) Free standing moorings associated with
public service or temporary construc-
tion/salvage operations can be permitted
without a public sponsor and shall be evalu-
ated on a case-bv-case basis.
(L) Free standing mooring buoys and piles are
to be evaluated based upon the arc of the
swing including the vessel to be moored.
Moorings and the attached vessel shall not
interfere with the access of any riparian
owner nor shall U block riparian access by
blocking channels, deep water, etc. which
allows riparian access. Free standing moor-
ings shall not interfere with the ability of
any riparian owner to place a pier for ac-
cess.
(M) Free standing moorings shall be marked or
colored in compliance with U.S. Coast
Guard and N.C. Wildlife Resource Commis-
sion requirements and the required marking
maintained for the life of the mooring(s).
(N) The type of material used to create a moor-
ing must be free of pollutants and of a
design and type of material so as to not
present a hazard to navigation or public
safety.
(O) Existing free standing moorings (i.e.
buoys/pilings) may be maintained in place
for two years. However, if tlie moorings(s)
deteriorate or are damaged such that re-
placement is necessary during the two year
period, the mooring(s) then must comply
with those guidelines of the Division in place
at that time. In any event, existing moor-
ings must comply with these Rules within
two years.
(1 1) Filling of Canals. Basins and Ditches ; Not
withstanding the general use standards for
estuarine systems as set out in 7H ■0208(a') of
this Rule, filling canals, basins and ditches shall
be allowed if^
(A) the area to be filled was not created by exca-
vating lands which were below the noimal
high water or normal water level: and
(B) if the area was created from wetlands, the
elevation of the proposed filling does not
exceed the elevation of said wetlands so that
wetland function will be restored; and
(O the filling will not adversely impact any desig-
nated primary nursery area, shellfish bed, bed
of submerged aquatic vegetation, coastal
wetlands other than a narrow fringe around the
shoreline, recognized public trust right or
established public trust usage; and
(D) the filling will not adversely affect the value
and enjoyment of property of any riparian
owner; and
(E) the Filling will further some policy of the
Commission such as retreating from erosion or
avoiding water quality degradation.
Statutory Authority G.S. 113A-107(b); 1I3A-108;
113A-113(b); 113A-124.
SECTION .0300 - OCEAN HAZARD
AREAS
.0305 GENERAL IDENTIFICATION AND
DESCRIPTION OF LANDFORMS
(a) Ocean Beaches. Ocean beaches are lands consisting
of unconsolidated soil materials that extend from the mean
low water line landward to a point where either:
(1) the growth of vegetation occurs, or
(2) a distinct change in slope or elevation alters the
configuration of the landform, whichever is
farther landward.
(b) Primary Dunes. Primary dunes are the first mounds
of sand located landward of the ocean beaches having an
elevation equal to the mean flood level (in a storm having a
one percent chance of being equaled or exceeded in any
given year) for the area plus six feet. The primary dune
extends landward to the lowest elevation in the depression
behind that same mound of sand (commonly referred to as
the dune trough).
(c) Frontal Dunes. The frontal dune is deemed to be the
first mound of sand located landward of the ocean beach
having sufficient vegetation, height, continuity and configu-
ration to offer protective value.
(d) General Identification. For the purpose of public and
administrative notice and convenience, each designated
minor development jjermit-letting agency with ocean hazard
areas may designate, subject to CRC approval, a readily
identifiable land area within which the ocean hazard areas
occur. This designated notice area must include all of the
1559
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
land areas defined in Rule .0304 of this Section. Natural or
man-made landmarks may be considered in delineating this
area.
(e) "Vegetation Line" means the first line of stable natural
vegetation, which shall be used as the reference point for
measuring oceanfront setbacks. This line represents the
boundary between the normal dry-sand beach, which is
subject to constant flux due to waves, tides, storms and
wind, and the more stable upland areas. It is generally
located at or immediately oceanward of the seaward toe of
the frontal dune or erosion escarpment. In areas where
there is no stable natural vegetation present, this line shall
be established by connecting or extending the lines from the
nearest adjacent vegetation on either side of the site and by
extrapolating (by either on-ground observation or by aerial
photographic interpretation) to establish the line. In areas
within the boundaries of a beach nourishment or spoil
deposition project which is likely to change the location of
the vegetation line, the vegetation line means the first line
of stable natural vegetation as it existed prior to initiation of
the beach nourishment or spoil deposition project. A project
will be considered likely to change the location of the
vegetation line based on an analysis of the amount and
quality of sand and the maimer in which the sand is placed
on the beach.
(f) "Erosion Escarpment" means normal vertical drop in
the beach profile caused from high tide or storm tide
erosion.
(g) Measurement line means the line from which the
ocean front setback as described in Rule .0306(a) of this
Subchapt e r Section is measured in the unvegetated beach
area of environmental concern as described in Rule
.0304(a)(4) of this Subchapter. Section. Procedures for
determining the measurement line shall be adopted by the
Commission for each area where such a line is designated.
These procedures shall be available from any local permit
officer or the Division of Coastal Management.
Statutory Authority G.S. 113A-107; 113A-1 13(b)(6);
113A-J24.
.0308 SPECIFIC USE STANDARDS FOR
OCEAN HAZARD AREAS
(a) Ocean Shoreline Erosion Control Activities:
(1) Use Standards Applicable to all Erosion Control
Activities:
(A) All oceanfront erosion response activities shall
be consistent with the general policy statements
in 15A NCAC 7M .0200.
(B) Permanent erosion control structures may
cause significant adverse impacts on the value
and enjoyment of adjacent properties or public
access to and use of the ocean beach, and,
therefore, are prohibited. Such structures
include, but are not limited to: bulkheads;
seawalls; revetments; jetties; groins and break-
waters.
(C) Rules concerning the use of oceanfront erosion
response measures apply to all oceanfront
properties without regard to the size of the
structure on the property or the date of its
construction.
(D) All permitted oceanfront erosion response
projects, other than beach bulldozing and
temjKjrary placement of sandbag structures,
shall demonstrate sound engineering for their
planned purpose.
(E) Shoreline erosion response projects shall not
be constructed in beach or estuarine areas that
sustain substantial habitat for important fish
and wildUfe species unless adequate mitigation
measures are incorporated into project design,
as set forth in Rule .0306(1) of this Section.
(F) Project construction shall be timed to minimize
adverse effects on biological activity.
(G) Prior to completing any erosion response
project, all exposed remnants of or debris from
failed erosion control structures must be re-
moved by the permittee.
(H) Erosion control structures that would otherwise
be prohibited by these standards may be per-
mitted on finding that:
(i) the erosion control structure is necessary
to protect a bridge which provides the only
existing road access to a substantial p>opu-
lation on a barrier island; that is vital to
public safety; and is imminently threatened
by erosion;
(ii) the erosion response measures of reloca-
tion, beach nourishment or temporary
stabilization are not adequate to protect
public health and safety; and
(iii) the proposed erosion control structure will
have no adverse impacts on adjacent prop-
erties in private ownership and will have
minimal impacts on public use of the
beach.
(I) Structures that would otherwise be prohibited
by these standards may also be permitted on
finding that:
(i) the structure is necessary to protect an
historic site of national significance, which
is imminently threatened by shoreline
erosion; and
(ii) the erosion response measures of reloca-
tion, beach nourishment or temporary
stabilization are not adequate and practica-
ble to protect the site; and
(iii) the structure is limited in extent and scope
to that necessary to protect the site; and
(iv) any permit for a structure under this Part
(I) may be issued only to a sponsoring
pubUc agency for projects where the pub-
lic benefits clearly outweigh the short or
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November 1, 1995
1560
PROPOSED RULES
long range adverse impacts. Additionally,
the jjermit must include conditions provid-
ing for mitigation or minimization by that
agency of any significant and unavoidable
adverse impacts on adjoining properties
and on public access to and use of the
beach.
(J) Structures that would otherwise be prohibited
by these standards may also be permitted on
finding that:
(i) the structure is necessary to maintain an
existing commercial navigation channel of
regional significance within federally
authorized limits; and
(ii) dredging alone is not practicable to main-
tain safe access to the affected channel;
and
(iii) the structure is limited in extent and scope
to that necessary to maintain the channel;
and
(iv) the structure will not result in substantial
adverse impacts to fisheries or other public
trust resources; and
(v) any permit for a structure under this Part
(J) may be issued only to a sponsoring
public agency for projects where the pub-
lic benefits clearly outweigh the short or
long range adverse impacts. Additionally,
the fjermit must include conditions provid-
ing for mitigation or minimization by that
agency of any significant and unavoidable
adverse impacts on adjoining properties
and on public access to and use of the
beach.
(K) Proposed erosion response measures using
innovative technology or design will be consid-
ered as experimental and will be evaluated on
a case-by-case basis to determine consistency
with 15A NCAC 7M .0200 and general and
specific use standards within this Section.
(2) Temporary Erosion Control Structures:
(A) Permittable temporary erosion control struc-
tures shall be limited to sandbags placed above
mean high water and parallel to the shore.
(B) Temporary erosion control structures as de-
fined in Part (2)(A) of this Subparagraph may
be used only to protect imminently threatened
structures. Normally, a structure will be
considered to be imminently threatened if its
foundation septic system, or right-of-way in
the case of roads, is less than 20 feet away
from the erosion scarp.
(C) Temporary erosion control structures may be
used to protect only the principal structure and
its associated septic system, but not such
appurtenances as gazebos, decks or any ame-
nity that is allowed as an exception to the
erosion setback requirement.
(D) TemjKirary erosion control structures may be
placed seaward of a septic system when there
is no alternative to relocate it on the same or
adjoining lot so that it is landward of or in line
with the structure being protected.
(E) Temporary erosion control structures must not
extend more than 20 feet past the sides of the
structure to be protected. The landward side
of such temp>orary erosion control structures
shall not be located more than 20 feet seaward
of the structure to be protected or the
right-of-way in the case of roads.
(F) A temporary erosion control structure may
remain in place for up to two years after the
date of approval if it is protecting a building
with a total floor area of 5000 sq. ft. or less,
or, for up to five years if the building has a
total floor area of more than 5000 sq. ft. A
temporary erosion control structure may re-
main in place for up to five years if it is
protecting a bridge or a road. The property
owner will be responsible for removal of the
temporary structure within 30 days of the end
of the allowable time period. A temporary
erosion control structure may remain in place
for up to five years regardless of the size of
the structure if the community in which it is
located is actively pursuing a beach nourish-
ment project. For purposes of this Rule, a
community is considered to be actively pursu-
ing a beach nourishment project if it has:
(i) been issued a CAMA permit approving
such project, or
(ii) been deemed worthy of further consider-
ation by a U.S. Army Corps of Engineers'
Beach Nourishment Reconnaissance Study,
or
(iii) received a favorable economic evaluation
report on a federal project approved prior
to 1986.
(G) Once the temporary erosion control structure
is determined to be unnecessary due to reloca-
tion or removal of the threatened structure, it
must be removed by the property owner within
30 days.
(H) Removal of temporary erosion control struc-
tures may not be required if they are covered
by dunes with vegetation sufficient to be
considered stable and natural.
(I) The property owner shall be resjx)nsible for
the removal of remnants of all portions of any
damaged temporary erosion control structure.
(J) Sandbags used to construct temporary erosion
control structures shall be tan in color and
three to five feet wide and seven to 15 feet
long when measured flat. Base width of the
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November I, 1995
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PROPOSED RULES
I
i
structure shall not exceed 20 feet, and the
height shall not exceed six feet.
(K) Soldier pilings and other types of devices to
anchor sandbags shall not be allowed.
(L) Construction of a temporary erosion control
structure can be approved only once on any
property regardless of ownership.
(M) Existing sandbag structures can be maintained
provided that the permitted dimensions are not
exceeded.
(N) Existing sandbag structures that have been
properly installed prior to May 1, 1995 shall
be allowed to remain in place according to the
provisions of Parts (F), (G) and (H) of this
Subparagraph with the pertinent time periods
beginning on May 1, 1995.
(3) Boach Nourighmont. Beach Nourishment/Spoil
Disposal:
(A) Sand used for beach nourishment shall be
compatible with existing grain size and type.
Sand to be used for beach nourishment shall be
taken only from those areas where the result-
ing environmental impacts will be minimal.
CB) The vegetation line existing at the beginning of
any large scale beach nourishment or spoil
deposition project shall be located by PCM
and surveyed by the project sponsor or permit-
tee and placed on the current erosion rate
maps. Said line shall be used for future set-
back determinations.
(4) Beach Bulldozing. Beach bulldozing (defined as
the process of moving natural beach material
from any point seaward of the first line of stable
vegetation to create a protective sand dike or to
obtain material for any other purpose) is devel-
opment and may be permitted as an erosion
response if the following conditions are met:
(A) The area on which this activity is being per-
formed must maintain a slope of adequate
grade so as to not endanger the public or the
public's use of the beach and shall follow the
pre-emergency slope as closely as possible.
The movement of material utilizing a bull-
dozer, front end loader, backhoe, scraper, or
any type of earth moving or construction
equipment shall not exceed one foot in depth
measured from the pre-activity surface eleva-
tion;
(B) The activity must not exceed the lateral bounds
of the applicant's property unless he has per-
mission of the adjoining land owner(s);
(C) Movement of material from seaward of the
low water line will require a CAMA Major
Development and State Dredge and Fill Per-
mit;
(D) The activity must not significantly increase
erosion on neighboring properties and must not
have a significant adverse effect on important
natural or cultural resources;
(E) The activity may be undertaken to protect
threatened on-site waste disposal systems as
well as the threatened structure's foundations.
(b) Dune Establishment and Stabilization. Activities to
establish dunes shall be allowed so long as the following
conditions are met:
(1) Any new dunes established shall be aligned to
the greatest extent possible with existing adjacent
dune ridges and shall be of the same general
configuration as adjacent natural dunes.
(2) Existing primary and frontal dunes shall not,
except for beach nourishment and emergency sit-
uations, be broadened or extended in an
oceanward direction.
(3) Adding to dunes shall be accomplished in such
a manner that the damage to existing vegetation
is minimized. The filled areas will be immedi-
ately replanted or temporarily stabilized until
planting can be successfully completed.
(4) Sand used to establish or strengthen dunes must
be of the same general characteristics as the
sand in the area in which it is to be placed.
(5) No new dunes shall be created in inlet hazard
areas.
(6) Sand held in storage in any dune, other than the
frontal or primary dune, may be redistributed
within the AEC provided that it is not placed
any farther oceanward than the crest of a pri-
mary dune or landward toe of a frontal dune.
(7) No disturbance of a dune area will be allowed
when other techniques of construction can be
utilized and alterative site locations exist to
avoid uimecessary dune impacts.
(c) Structural Accessways:
(1) Structural accessways shall be permitted across
primary dunes so long as they are designed and
constructed in a manner which entails negligible
alteration on the primary dune. Structural ac-
cessways may not be considered threatened
structures for the purpose of Paragraph (a) of
this Rule.
(2) An accessway shall be conclusively presumed to
entail negligible alteration of a primary dune:
(A) The accessway is exclusively for pedestrian
use;
(B) The accessway is less than six feet in width;
and
(C) The accessway is raised on posts or pilings of
five feet or less depth, so that wherever possi-
ble only the posts or pilings touch the frontal
dune. Where this is deemed impossible, the
structure shall touch the dune only to the
extent absolutely necessary. In no case shall
an accessway be permitted if it will diminish
the dune's capacity as a protective barrier
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1562
PROPOSED RULES
against flooding and erosion; and
(D) Any areas of vegetation that are disturbed are
revegetated as soon as feasible.
(3) An accessway which does not meet Part (2)(A)
and (B) of this Paragraph shall be permitted only
if it meets a public purpose or need which
cannot otherwise be met and It meets Part (2)(C)
of this Paragraph. Public fishing piers shall not
be deemed to be prohibited by this Rule, pro-
vided all other applicable standards are met.
(4) In order to avoid weakening the protective
nature of primary and frontal dunes a structural
accessway (such as a "Hatteras ramp") shall be
provided for any off-road vehicle (ORV) or
emergency vehicle access. Such accessways
shall be no greater than 10 feet in width and
shall be constructed of wooden sections fastened
together over the length of the affected dune
area.
(d) Construction Standards. New construction and
substantial improvements (increases of 50 percent or more
in value on square footage) to existing construction shall
comply with the following standards:
(1) In order to avoid unreasonable danger to life and
prof)erty, all development shall be designed and
placed so as to minimize damage due to fluctua-
tions in ground elevation and wave action in a
100 year storm. Any building constructed
within the ocean hazard area shall comply with
the North Carolina Building Code including the
Coastal and Flood Plain Construction Standards,
Chapter 34, Volume I or Section 39, Volume
1-B and the local flood damage prevention
ordinance as required by the National Flood
Insurance Program. If any provision of the
building code or a flood damage prevention
ordinance is inconsistent with any of the follow-
ing AEC standards, the more restrictive provi-
sion shall control.
(2) All structures in the ocean hazard area shall be
on pilings not less than eight inches in diameter
if round or eight inches to a side if square.
(3) All pilings shall have a tip penetration greater
than eight feet below the lowest groimd elevation
under the structure. For those structures so
located on the primary dune or nearer to the
ocean, the pilings must extend to five feet below
mean sea level.
(4) All foundations shall be adequately designed to
be stable during applicable fluctuations in ground
elevation and wave forces during a 100 year
storm. Cantilevered decks and walk'ways shall
meet this standard or shall be designed to
break-away without structural damage to the
main structure.
113A-113(b)(6)a. .b. ,d.; 113A-124.
SECTION .2300 - GENERAL PERMIT FOR
REPLACEMENT OF EXISTING
BRIDGES AND CULVERTS IN
ESTUARINE WATERS, ESTUARINE
SHORELINES, PUBLIC TRUST
AREAS, AND COASTAL WETLANDS
.2301 PURPOSE
This permit will allow the replacement of existing bridges
and culverts in estuarine water, estuarine shoreline, public
trust areas and coastal wetland AECs according to authority
provided in 15A NCAC 7J . 1 100 and according to the
following guidelines.
Stamory Authority G.S. 113A-107; 113A-118.1; 113A-124.
.2302 APPROVAL PROCEDURES
(a) The applicant must contact the Division of Coastal
Management and complete an application form requesting
a pproval for development.
(b) The a pplicant must provide:
(1) information on site location, detailed project
description, and his/her name, address and
telephone number:
(2) a dated scaled plat(s) showing existing and
proposed development that follows the criteria
outlined in 15A NCAC 7J .0203, a completed
Form DCM-MP-5; and
(3) confirmation that:
(A) a written statement has been obtained and
signed by the adjacent riparian property own-
ers indicating that they have no objections to
the proposed work; or
(B) the adjacent riparian property owners have
been notified by certified mail of the proposed
work. Such notice shall instruct adjacent
property owners to provide any comments on
the proposed development in writing for con-
sideration by permitting officials to the Divi-
sion of Coastal Management within 10 days of
receipt of the notice, and, indicate that no
response will be interpreted as no objection.
DCM staff will review all comments. If DCM
determines that:
m
(ii}
the comments are relevant to the potential
impacts of the proposed project: and
the permitting issues raised by the com-
ments are worthy of more detailed review,
the applicant will be notified that he/she
must submit an application for a major
development permit,
(c) A pproval of individual projects will be acknowledged
in writing by the Division of Coastal Management and the
applicant shall be provided a copy of this Section. Con-
Statutory Authority G.S. 1 13A- 107(a); 113A-107(b); struction authorized by this permit must be completed within
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NORTH CAROLINA REGISTER
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PROPOSED RULES
one year of permit issuance or the general authorization
expires and a new permit shall be required to begin or
continue construction.
(d) No work shall begin until an onsite meeting is held
with the applicant and appropriate Division of Coastal
Management representative. Written authorization to
proceed with the proposed development may be issued
during this visit if other approval procedure criteria have
been met.
Statutory Authority G.S. 113A-107; 113A-118.1; 113A-124.
.2303 PERMIT FEE
The applicant must pay a permit fee of fifty dollars
($50.00) by check or money order payable to the Depart-
ment.
Stamtory Authority G.S. 113A-107; 113A-118.1; 113A-124.
.2304 GENERAL CONDITIONS
(a) Projects authorized by this permit will be demolition,
removal, and replacement of existing bridges and culverts
along the existing alignment and conforming to the standards
herein. This permit is a pplicable only to single bridge and
culvert projects and does not authorize temporary fill
causeways or temporary bridges that may be associated with
bridge replacement projects.
£b} The permittee shall allow authorized representatives
of the Department of Environment, Health, and Natural
Resources (DEHNR) to make periodic inspections at any
time deemed necessary in order to be sure that the activity
being performed under authority of this general permit is in
accordance with the terms and conditions prescribed herein.
(c) This general p)ermit will not be a pplicable to proposed
construction where DEHNR believes that authorization may
be warranted, but that the proposed activity might signifi-
cantly affect the quality of human environment or unneces-
sarily endanger adjoining properties.
(d) This general permit will not be a pplicable to proposed
construction where DEHNR determines, after any necessary
investigations, that the proposed activity would adversely
affect areas which possess historic, cultural, scenic, conser-
vation, or recreational values.
(e) DEHNR may, on a case by case basis, determine that
the general permit shall not be applicable to a specific
construction proposal. In these cases, individual permit
applications and review of the proposed project will be
required according to 15A NCAC 7J.
(f) This permit does not eliminate the need to obtain any
other required state, local, or federal authorization.
(g) Development carried out under this permit must be
consistent with all local requirements. AEC guidelines, and
local land use plans current at the time of authorization.
(h) This permit does not apply to projects that require
work channels.
£i} Review of individual project requests will be coordi-
nated with appropriate Division of Marine Fisheries or
Wildlife Resources Commission personnel. This may result
in a construction moratorium during periods of highest
biological productivity.
(i) Development under this permit must be carried out
within existing Department of Transportation (DOT) right-
of-ways or on lands under the ownership of the applicant in
the case of a non-DQT project.
(k) Bridge and culvert replacements shall be designed to
minimize any adverse impacts to potential navigation or use
of the waters by the public.
(I) This permit shall apply only to projects involving
repair or replacement of bridges currently serving their
intended function.
Statutory Authority G.S. 113A-107; U3A-118.1; U3A-124.
.2305 SPECIFIC CONDITIONS
(a) This general permit is applicable to bridge replace-
ment projects spanning no more that 250 feet of estuarine
water, public trust area, and coastal wetland AECs.
(b) Existing roadway deck width caimot be expanded to
create additional lanes.
(c) Replacement of existing bridges with new bridges
shall not reduce vertical or horizontal navigational clear-
ances.
(d) Bridges replacement projects shall not create vertical
clearance more that five feet above the NWL or NHW. or
by more than 25 percent of the existing vertical clearance,
whichever is greater.
(e) All demolition debris will be disposed of in approved
highground locations.
(f) Bridges and culverts shall be designed to allow
passage of anticipated high water flows.
(g) Measures sufficient to adequately restrain sedimenta-
tion and erosion shall be implemented at each site. These
measures should be coordinated through the North Carolina
Division of Land Resources.
(h) Limits of excavation and fill: Bridge or culvert
replacement activities involving excavation or fill in
wetlands, public trust areas, and estuarine waters shall meet
the following conditions:
(1) Replacing bridges with culverts shall not be
allowed in primary nursery areas.
(2) The total area of public trust area, estuarine
waters, and wetlands to be excavated or filled
shall not exceed 2.500 square feet except that
the wetland component shall not exceed 500
square feet.
(3) Culverts shall not be used to replace bridges
with open water spans greater than 50 feet.
(4) The temporary placement or double handling of
excavated or fill materials within waters or
vegetated wetlands is not authorized.
(5") No excavated or fill material will be placed at
any time in any wetlands or surrounding waters
outside of the alignment of the fill area indicated
on the work plat(s').
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PROPOSED RULES
(6) All excavated materials will be confined above
mean high water or normal water level and
landward of any wetlands behind adequate dikes
or other retaining structures to prevent spill-over
of solids into any wetlands or surrounding
waters.
(7) Placement of fill shall be restricted to the widen-
ing of the approaches, or that which is necessary
to install culvert(s).
(8) No bridges with a clearance of four feet or
greater above the NWL or NHW will be allowed
to te replaced with culvert(s) unless the culvert
design maintains the existing water depth, verti-
cal clearance and horizontal clearance.
(9) If a bridge is being replaced by a culvert(s) then
the width of the waterbody shall not be de-
creased by more than 40 percent.
Statutory Authority G.S. 113A-107; 113A-118.1; 113A-124.
Notice is hereby given in accordance with G.S.
150B-21.2 that the North Carolina Wildlife Resources
Commission intends to amend rule cited as 15A NCAC lOF
.0339.
Proposed Effective Date: February 1 , 1996.
A Public Hearing will be conducted at 10:00 a.m. on
November 20, 1995 at the Archdale Building, Room 332,
512 N. Salisbury Street. Raleigh, NC 27604.
Reason for Proposed Action: To regulate boat speeds in
congested areas. Pending changes are in italics.
Comment Procedures: Interested persons may present their
views either orally or in writing at the hearing. In addition,
the record of hearing will be open for receipt of written
comments from November 1, 1995 - December 1, 1995.
Such written comments must be delivered or mailed to the
North Carolina Wildlife Resources Commission, 512 North
Salisbury Street, Raleigh, North Carolina 27604-1188.
Fiscal Note: This Rule does not affect the expenditures or
revenues of local government or state funds.
CHAPTER 10 - WILDLIFE RESOURCES AND
WATER SAFETY
SUBCHAPTER lOF - MOTORBOATS ANT)
WATER SAFETY
SECTION .0300 - LOCAL WATER SAFETY
REGULATIONS
.0339 MCDOWELL COUNTY
(a) Regulated Areas. This Rule applies to the following
waters located on Lake James in McDowell County:
(1) that area adjacent to the shoreline of the
McEtowell Wildlife Club property;
(2) that area adjacent to the shoreline of the Marion
Moose Club property;
(3) that area known as Morgan Cove;
(4) that area within 50 yards of the shoreline at the
New Manna Baptist Youth Camp;
(5) that area within 50 yards of the shoreline at
Burnett's Landing;
(6) the cove area adjacent to the State Park swim-
ming area;
(7) the cove area adjacent to the State Park picnic
area and dock;
(8) that area within 50 yards of camping areas in the
Lake James State Park as designated by the
appropriate markers;
(9) that area within 50 yards of the boat launching
ramp at the Marion Lake Club. Club:
(10) that area within 50 yards in either direction from
the marina docks in Plantation Point Cove;
(1 1) that designated area of Goodman's Landing
Cove within 50 yards of the swimming area and
boat docks of Goodman's Campground.
(b) Speed Limit. No person shall operate any motorboat
or vessel at greater than no-wake speed within any of the
regulated areas described in Paragraph (a) of this Rule.
(c) Restricted Swimming Areas. No person operating or
responsible for the operation of any vessel, surfboard or
waterskis shall permit the same to enter any marked swim-
ming area located on the regulated area.
(d) Placement and Maintenance of Markers. The Board
of Commissioners of McDowell County is designated a
suitable agency for placement and maintenance of the
markers implementing this Rule.
Statutory Authority G.S. 75A-3; 75A-15.
TITLE 16 - DEPARTMENT OF PUBLIC
EDUCATION
Notice is hereby given in accordance with G.S.
1508-21. 2 that the State Board of Education intends to
amend rule cited as 16 NCAC 6C .0101; and adopt rule
cited as 16 NCAC 6C .0313.
Temporary: These Rules were filed as temporary rules
effective October 10, 1995 for a period of 180 days or until
the permanent rule becomes effective, whichever is sooner.
Proposed Effective Date: April 1, 1996.
A Public Hearing will be conducted at 9:00 a.m. on
December 5 , 1995 at the Education Building, Room 224,
301 N. Wilmington Street. Raleigh, NC 27601-2825.
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PROPOSED RULES
Reason for Proposed Action: TTiese Rules are needed to
implement Chapter 373 of the 1995 Session Laws so that
local school boards may adopt policies governing the use of
criminal history checks for applicants.
Conunent Procedures: Any interested person may present
comments either orally at the hearing or in writing before or
at the hearing.
Fiscal Note: These Rules do not affect the expenditures or
revenues of local government or state fiinds.
CHAPTER 6 - ELEMENfTARY AND SECONDARY
EDUCATION
SUBCHAPTER 6C - PERSONNEL
SECTION .0100 - GENERAL PROVISIONS
.0101 DEFINITIONS
As used in this Subchapter:
m
means and includes
£cl
m
(3}
(a)
(b)
(4i
(5}
m
"Convicted" or "Conviction"
the entry of:
a plea of guilty:
a verdict or finding of guilt by a jury, judge,
magistrate, or other duly constituted, estab-
lished, and recognized adjudicating body, tribu-
nal, or official, either civilian or military; or
a plea of no contest, nolo contendere, or the
equivalent.
^ "Institution of higher education" (ME) means
a senior college or university.
(3) "Instructional personnel" means all teachers
as defined by G.S. 1 15C-325, with the exception
of supervisors, and non-teaching principals,
assistant principals, social workers, counselors and
psychologists. The term includes principals,
assistant principals, or counselors who teach any
part of the day, librarians and instructional aides,
except that:
aides are not included for the purpose of apply-
ing Rule .0403 of this Subchapter; and
aides are not included for the purpose of apply-
ing Rule .0301 of this Subchapter.
(3) "License" has the same meaning as the term
"certificate" as used in 16 NCAC lA .0001(2).
(4) "National Teachers' Examination" (NTE)
means the standard examination adopted by the
SBE pursuant to G.S. 115C-284(c), 115C-296 and
115C-3 15(d).
(5) "Other personnel" means those persons not
included within the defmition of instructional
personnel.
(^ "Part-time employee" means a person em-
ployed for at least 20 hours per week.
f7) "Permanent employee" means a person who
(a)
(b)
(c)
is not a student enrolled in the school system who
is employed:
(a) other than on an interim basis, to fill a position
which is to become permanent if current needs
and funds continue; or
(b) for at least six months under one contract, to
replace one or more employees who are on leave
without pay.
(9) (^ "Professional public school employee" means
and includes:
teachers;
Administrators (superintendents, assistant or
associate sup>erintendents, principals, assistant
principals, and supervisors); and
education specialists (coimselors, school social
service workers, curriculum instructional spe-
cialists, school psychologists, and media person-
nel).
(10) ^ "Renewal credit" means credit earned by a
certificated employee for certificate renewal
purposes.
(11) (4^ "SACS" means the Southern Association of
Colleges and Schools.
(12) f44^ "Substitute" means a person who holds a
teacher's certificate, or who is a college graduate,
or who has been determined by a local board to be
capable of performing the duties of a substitute
teacher.
(13) (43) "Teacher education program" means the
curriculum, instructional resources and faculty that
contribute to the quality of instruction and the
acquisition of knowledge, skills and competencies
required for professional personnel to perform
effectively in the public schools.
Authority N. C. Constitution, Article IX, Sec. 5.
SECTION .0300 - CERTIFICATION
.0313 CRIMINAL HISTORY CHECKS
(a) An LEA may obtain criminal history checks on
a pplicants for employment as provided in G.S. 115C-332
and on applicants and current employees as provided in G.S.
114-19.2(3).
(b) An LEA shall not make any employment decision
based solely upon the criminal history check provided by the
Department of Justice whether provided pursuant to G.S.
115C-332 or G.S. 114-19.2(a). An LEA shall obtoin from
the repository of the record a certified copy of an appli-
cant's or employee's conviction prior to making a final
employment decision based on the conviction.
(c) An LEA shall maintain data from a criminal history
check from Department of Justice in paper format only, in
a locked, secure place, separate from the individual's
a pplication or personnel file. Only those officials who have
been designated by the local board of education as having a
need to know the results of a criminal history check may
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1566
PROPOSED RULES
obtain access to the records. Certified copies of records of
convictions are public records and need not be maintained
in accordance with this Rule.
(d) In the event the LEA discovers as a result of a
criminal history check from Department of Justice that any
applicant or employee who possesses a certificate or license
issued by the SBE has a criminal history, the LEA shall
notify in writing the SBE office of legal counsel and shall
submit to that office a certified copy of the record of
conviction or convictions. TTie office of legal counsel may
initiate license or certificate revocation as appropriate.
(e) Nothing in this Rule is intended to prohibit suspension
with or without pay or demotion or dismissal pursuant to the
provisions of G.S. 1 15C-325 without any requirement that
there be actual conviction of a crime.
Statutory Authority 1995 S.L. , c. 373, s. 3.
TITLE 18 - SECRETARY OF STATE
Notice is hereby given in accordance with G.S.
150B-21.2 that the Secretary of State intends to amend
rules cited as 18 NCAC 4 .0102, .0201, .0203, .0205 -
.0206. .0302 - .0308. .0311. .0316. .0401 - .0402. .0501 -
.0504; 18 NCAC 5 .0101, .0103 - .0209, .0305; 18 NCAC
6 .1601 - .1602, .1607; 18 NCAC 7 .0302; repeal 18
NCAC 4 .0312 - .0314; 18 NCAC 5 .0304, .0404; 18 NCAC
6 . 1605; and adopt 18 NCAC 4 .0317 - .0318.
Temporary: (18 NCAC 4 .0317 - .0318 were filed as
temporary adoptions effective November 10, 1995 for a
period of 180 days or until the permanent rule becomes
effective, whichever is sooner.)
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conducted at 10:00 a.m. on
December 4, 1995 at the Legislative Office Building, 3rd
Floor Conference Room, 300 N. Salisbury Street, Raleigh,
NC 27603-5909.
Reason for Proposed Action:
18 NCAC 4 .0102 - To add newly created statutory entities
to responsibilities of Corporations Division.
18 NCAC 4 .0201 - To reflea the repeal of tax on filing of
nonprofit corporation documents.
18 NCAC 4 .0203 - To reflect change in title of personnel.
18 NCAC 4 .0205 - To reflect the repeal of tax on filing of
nonprofit corporation documents.
18 NCAC 4 .0206 - To reflea change in statute numbers
and repeal of tax on filing of nonprofit documents.
18 NCAC 4 .0302 - To conform rule to creation of new
statutory business entities.
18 NCAC 4 .0303 - To reflect change in statutory criteria
for acceptance of nonprofit documents submitted for filing
and change in Division accounting procedures.
18 NCAC 4 .0304 - To conform rule to addition of new
statutory business entity.
18 NCAC 4 .0305 - To conform rules to new statutory
procedures for corrective filings.
18 NCAC 4 .0306 - To conform rules to new statutory
requirements for nonprofit corporations and to modify rule 's
application to encompass limited liability companies.
18 NCAC 4 .0307 - To reflect recent revisions to statutory
requirements on name availability.
18 NCAC 4 .0308 - To broaden rule to encompass limited
liability companies.
18 NCAC 4 .0311 - To broaden rule to encompass L.L.C.
mergers.
18 NCAC 4 .0312 - Rule superseded by G.S. 55B-16.
18 NCAC 4 .0313 & .0314 - Rule superseded by statutory
procedures.
18 NCAC 4 .0316 - To broaden rule to encompass limited
liability companies.
18 NCAC 4 .0317 & .0318 - Procedure in rule mandated by
statute.
18 NCAC 4 .0401 - To modify rule to encompass limited
liability companies.
18 NCAC 4 .0402 - To encompass limited liability compa-
nies and to reflect new statutory fees.
18 NCAC 4 .0501 - To reflect revised statutory requirements
on name availability.
18 NCAC 4 .0502 - To clarify terms used in rule and to
reference new statutory procedure for qualificcuion of foreign
professional corporations.
18 NCAC 4 .0503 - To reflect current statutory name
availability criteria.
18 NCAC 4 .0504 - To reflect creation of limited liability
companies.
18 NCAC 5 .0101 - To correct the hours of operation of the
U.C.C. Division.
18 NCAC 5 .0203 - To corform the rule to revised statutory
requirements on U.C.C. filing fees.
18 NCAC 5 .0204 - To reflect current administrative policy
on refunds of overpayment.
18 NCAC 5 .0205 - To reflea amendments to time period
allowed for filing of U.C.C. continuation statement.
18 NCAC 5 .0206 - To eliminate repetition of contents of
statute.
18 NCAC 5 .0207 - To cotform the rule to revised statutory
requirements on U.C.C. filing fees.
18 NCAC 5 .0208 & .0209 - To reflea current administra-
tive operating praaices.
18 NCAC 5 .0304 - U.C.C. Division now allows the public
to search its records.
18 NCAC 5 .0305 - To reflect the statutory requirement of
tender of fee as requirement of filing.
18 NCAC 5 .0404 - To reflea current administrative policy.
18 NCAC 6 .1601 - .1602, .1604 - .1605, .1607 - To reflea
statutory amendments.
18 NCAC 7 .0302 - To conform the rule to requirements of
the new G.S. lOA-4.
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NORTH CAROLINA REGISTER
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PROPOSED RULES
Comment Procedures: Interested persons may present their
views either orally or in writing at the hearing, or mail
comments to 300 N. Salisbury St. , Raleigh, NC 27603-5909.
All comments must be received no later than 5 p.m. on
December 4, 1995.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government furuis.
CHAPTER 4 - CORPORATIONS DIVISION
SECTION .0100 - GENERAL PROVISIONS
.0102 ADMINISTRATION AND FUNCTIONS
(a) The chief officer of the Division is the Director.
(b) The Division is responsible for filing and maintaining
documents on behalf of corporations corporations, limited
liability companies, limited liability partnerships, and
limited partnerships whenever filing with the Secretary of
State is specified by statute.
(c) The Division prepares and certifies copies of docu-
ments on file upon request. Statutory fees are charged for
preparation and certification.
(d) The Division provides information in response to
written or telephone inquiry, based on information contained
in documents on file. There is no fee for providing infor-
mation by telephone or letter.
(e) The Division certifies to facts contained in documents
on file, based on an examination of its documents and
indices.
Statutory Authority G.S. 55-1-22; 55-1-25; 55-1-30; 55A-1-
22 ; 55A-1-25; 55A-I-30; 57C-1-22; 57C-1-25; 57C-I-30;
59-84.2; 59-206.
SECTION .0200 - PAYMENT OF
FEES AND TAXES
.0201 TENDER OF FEE
Filing of any document shall be accomplished only uf>on
tender of applicable filing fee and tax to the Division.
Statutory Authority G.S. 55-1-22; 55-1-30; 55A-1-22; 55A-1-
30; 57C-1-22; 57C-1-30; 59-1106.
If the Director determines that an overpayment of tax or
fees by check or money order is so large that it is not in the
interest of the state to issue a refund, he shall require tender
of the exact amount of tax or fees prior to filing, prepara-
tion of copies, or certification.
Statutory Authority G.S. 55-1-30; 55A-1-30; 57C-1-30 .
.0206 DOCUMENTS NOT SPECIFICALLY
PROVIDED FOR
When any document is filed for any corpxjration organized
under a statute other than one found in Chapter 55 or 55A,
and no fee is specifically provided in the applicable statute,
the fee or tax for such filing shall be the fee or tax provided
in G.s! 55-1-22 55 1 22; G.S. 55A 77; or G.S. 55A 7 8
55A-1-22 : for a comparable type of document, and if no
comparable type of document exists, the fee shall be the fee
provided in G.S. 55-l-22(a)(26) or G.S. 55 A 77(a)(17);
55A-l-22(27').
Statutory Authority G.S. 55-1-22; 55A-1-22.
SECTION .0300 - FUSING OF DOCUMENTS
.0302 EXECUTION
When execution is required by any jjerson acting in the
capacity of officer, director, incorporator, member, man-
ager, or registered agent, execution by a holder of a power
of attorney, by a personal representative, or by a legal
guardian of the person shall be rejected.
Statutory Authority G.S. 55-1-20; 55-1-30; 55A-1-20; 55A-1-
30; 57C-1-20; 57C-1-30.
.0303 REJECTION
If the Director finds that a document submitted for filing
pursuant to a provision of Chapter 55A or Chapter 59 does
not conform to law in any respect, he shall by return mail
or other appropriate method remit the document and f ee
submitted to the person who submitted such document,
accompanied by an explanation, in adequate detail, of the
deficiency and credit the fee to that person's account . The
date of filing of such document shall be the date upon which
the document is filed by the Division in such form as shall
conform to law.
.0203 INVOICES
Upon request for documents on file or certificates of
information not accompanied by the applicable fee, the
Division shall prepare and remit the material requested,
accompanied by an invoice for the applicable fee, unless it
is determined by the Corporations Attorney Director that it
is in the interest of the state to require prepayment.
Statutory Authority G.S. 55-1-30; 55A-1-30; 57C-1-30.
.0205 OVERPAYMENT
Statutory Authority G.S. 59-206.
.0304 IDENTIFICATION OF CORPORATION
/LLC AND TYPE OF DOCUMENT
(a) Each document shall consistently identify the corpora-
tion or limited liability company executing such document,
if executed by a corporation or limited liability company .
The oorpomte entity's name shall be recited throughout the
document in the identical form, as to sp>elling, spacing, and
punctuation, as the name appears in the existing charter of
the corporation entity .
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1568
PROPOSED RULES
(b) If captioned, a document shall contain in its caption
words identical to the words which appear in the applicable
statute to identify the type of document.
(c) Articles of incorporation for a business corpuDration
shall identify the corporation as a "business corporation" or
make reference to G.S. Chapter 55. Articles of incorpora-
tion for a nonprofit corpxaration shall identify the corporation
as a "nonprofit corporation" or make reference to G.S.
Chapter 55A. Articles of incorporation for a professional
corporation shall identify the corporation as a "professional
corporation" or make reference to G.S. Chapter 55B.
Statutory Authority G.S. 55-1-30; 55A-1-30; 55B-3; 55B-4;
57C-1-30.
.0305 CORRECTIVE HLINGS
PARTNERSHIPS
LIMITED
(q) ;\ny e rror in th e nam e of the regist e r e d ag e nt or th e
location of tho regiotered offioo whioh app e ars in any
documont which has boon filed by or on bohalf of a non
profit corfK)ration may bo corroctod by filing statomont of
chang e of r e gist e r e d offic e or r e gist e r e d ag e nt.
(b) Subj e ct to Paragraph (a) of this Rule, any e rror in th e
art i cles of incorporation of a nonprofit corporation which
have boon filed shall bo corroctod only by filing articles of
amendm e nt.
(o) Subj e ct to Paragraph (a) of this Rul e , any e rror in a
rostatod chartor of a nonprofit corporation which has boon .0307
filed shall bo corroctod only by filing a restated charter.
(49 — Subj e ct to Paragraph (a) of this Rul e , any e rror in
artioloo of morg e r or ooncolidation of nonprofit corporations
which havo boon filed shall be corroctod only by filing
articles of amendment oxocuted only by tho surviving or
now corporation.
(o) Subject to Paragraph (a) of this Rul e , any e rror in an
application for a c e rtifioato of authorify which ha s boon filed
by or on bohalf of a foreign nonprofit corporation shall bo
corr e ct e d only by filing an application for an am e nd e d
c e rtificat e of authority.
(^ An error in a certificate of limited partnership which
has been filed by or on behalf of a domestic limited partner-
ship or in an application for registration which has been
filed by a foreign limited partnership shall be corrected only
by the filing of an amended certificate of limited partnership
or an amended application for registration.
fg:) — In any cas e in whioh thoro io an e rror in any doou
ment whioh has boon fil e d by or on bohalf of a North
Carolina nonprofit corporation and for which the manner of
correction is not specified in Paragraphs (a) through (o) of
this Rule, th e only methodo of correcting such e rror shall b e
e ith e r:
W filing a documont pursuxmt to the same statut e
pursuant to which tho filing containing tho error
was made, or
(3) filing articl e o of am e ndm e nt.
fh^ — No document filed to correct an error shall make
roforonco to tho error or to "correction" or "corrected" in its
caption, but ouch error mny bo rooitod olsowhoro in the
docum e nt.
Statutory Authority G.S. 59-202; 59-905.
.0306 INCORPORATION BY REFERENCE
(a) TTi e addreoo of e ach director and incorporator and tho
address of tho registered offico in articles of incorpwration
shall contain a street address if tho address lists a oify with
a population of 5,000 or mor e poroono aooording to the
latest U.S. C e nsuo. In any instanc e wh e r e s treet addreoo ia
required, namo of building, rural routo number, or name of
road or street shall bo accepted in lieu of stroot oddroas, but
post offico box number alon e shall not bo accept e d.
(fe) Articles of incorporation whioh oontain bylaws or
articles of organi2ation in which bylaws or an operating
agreement are incorporated by reference shall be rejected.
Reference may be made in articles of incorporation
or articles of organization to bylaw provisions or provisions
in an operating agreement so long as such provisions are not
thereby incorporated in the charter.
(o) Art i ol e o of inoorp>oration fil e d pursuant to G.S. 55 A 7
s hall list namoo and addroosoo of a minimum of three initia l
director s .
Statutory Authority G.S. 55-2-02; 55A-2-02; 57C-2-21.
APPLICATION FOR RESERVATION
OF NAME
(a) If an applicant requests reservation of more than one
corporat e name for a corporation, a limited liability com-
pany, or a limited partnership , a separate application shall
be submitted for each name.
(b) The date of filing shall be the first day in determining
the date of expiration of reservation. The reservation shall
expire immediately after the termination of filings by the
Division on the final day of the reservation period. If the
final day of the reservation period is not an operating day of
the Division, the reservation shall nevertheless expire on
such final day.
(c) A person who wishes to reserve a particular corporate
limited partnership name after having reserved that name on
a previous occasion may apply to reserve such name again
after the elapse of one full business day following the
expiration of the previous reservation.
Statutory Authority G.S. 55-4-02; 55A-4-02; 57C-2-31; 59-
104.
.0308 REGISTERED OFFICE AND
REGISTERED AGENT
(a) In the event that a corporation has never designated a
registered office or registered agent, or in the event that the
a corporation's or limited liability company's registered
agent has resigned, the corporation entity may designate a
registered agent and/or registered office.
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NORTH CAROLINA REGISTER
November 1, 1995
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PROPOSED RULES
(h) — Tho foo for Filing a designation shall bo tho foo
opooifiod in G.S. 55 1 23(a)(9) or G.S. 55A 77(a)(17), oo
applioabl e .
fb) (e) The information required for the designation of a
registered agent or a registered office shall be set forth in a
statement which shall be substantially the same as that
provided for in G.S. 55 5 02. G.S. 55 15 8 , G.S. 55A 12,
or G.S. 55A 65, the change of a registered agent or regis-
tered office, except that it shall be unnecessary to set forth
information concerning the current registered agent or
current registered office.
(c) (d) With respect to documents permitted to be filed
with the Office of the Secretary of State, a person shall
consistently use the same name and same business office
address in each instance in which that person serves as
registered agent for any corporation or limited liability
company .
(d) (^ A person who serves as registered agent for more
than one corporation or limited liability company may notify
the Secretary of State of the change of the address of the
registered offices of such corporations entities by attaching
a list of the names of those oorporations entities to the
statement required to be filed by G.S. 55 5 02 or G.S.
55 15 8 55-5-02, G.S. 55-15-08. G.S. 55A-5-02, G.S.
55A-15-08. G.S. 57C-2-41. or G^ 57C-7-08 .
Statutory Authority G.S. 55-1-22; 55-1-30; 55-5-01;
55-5-02; 55-15-07; 55-15-08; 55A-1-22; 55A-1-30; 55A-5-
01; 55A-5-02; 55A-15-07; 55A-15-08; 57C-1-22; 57C-1-30;
57C-2-40; 57C-2-41; 57C-7-07; 57C-7-08.
.0311 ART OF MERGER/SHARE EXCH
INVOLVING FOREIGN ENTITY
(a) Each foreign corporation entity which is a party to a
merger or a share exchange pursuant to G.S. 55-11-07,
G.S. 55-11-09, G.S. 55A-11-06. or G.S. 55A 4 2.1 55A-11-
08. or 57C-9-06 shall be identified in the articles of merger
or share exchange by state or country of incorjxsration or
organization. Articles of merger filed pursuant to G.S.
55 11 07 or G.S. 55A 4 2.1 these statutes shall contain:
(1) a statement that the merger is permitted by the
law of the state or country of incorporation or
organization of each foreign corporation entity
which is a party, and
(2) a statement that each foreign corporation entity
which is a party has complied or shall comply
with the applicable laws of its state or country of
incorporation or organization regarding such
merger.
(b) Filing purouont to G.S. 55 1 1 07 or G.S. 55 A 42.1
shall hav e th e same eff e ct ao filing pursuant to G.S.
55 15 20 or G.S. 55 A 72 for any foreign corporation which
has authority to transact businoas in this state, which is a
party to suoh merger, — and which is not th e surviving
corporation.
Statutory Authority G.S. 55-11-07; 55-11-09; 55A-11-06;
55A-11-08; 57C-9-06.
.0312 APPL FOR CERT OF AUTHORITY BY
FOREIGN PROF CORPORATION
If a — for e ign — corporation — which — r e nders — professional
s e rvioeo as d e fin e d in G.S. 55B 2(6) applies for a oort i fioato
of authority, each copy of such application shall bo aooom
ponied by a cortiricato of tho applicable North Carolina
lic e nsing board, making th e flam e c e rtification as is required
for articles of incorporation pursuant to G.S. 55B 4(4).
This requirement shall not apply to any corporation which
was organized prior to Juno 5, 1969, and " i^ 'as fwrmittod by
th e l aw of its juriodiotion of incorporation to rend e r such
sen i 'io e s prior to Jun e 5, 1 9 69.
Statutory Authority G.S. 55-15-03; 55B-2; 55B-4; 55B-15.
.0313 FILING MERGER INVOLVING
FOREIGN CORPORATION
(a) — If one or more parties to a morgor Filed pursuant to
G.S. 55A 70 is a domestic corporation, th e Filing of artiol e o
of merg e r pursuant to G.S. 55A 41 and G.S. 55 A 42.1 shall
toko place prior to or simultaneously with tho filing of
articloe of morgor pursuant to G.S. 55 A 70.
(b) — Th e Filing of artioleo of m e rg e r pursuant to G.S.
55A 70 or G.S. 55A 41 shall be deemed a substitut e for and
shall have tho same ofFoct as tho Filing of an application for
withdrawal pursuxuit to G.S. 55 A 72 by any foreign oorpo
ration which has authority' to transact buoin e os in this state,
which is a party to ouch m e rg e r, and which is not th e
sup i 'iving corporation.
fe) — If a foroign corporation has been authorized to
transact business in this etat e and is a non ouP i 'iving part)' to
a statutory m e rg e r, th e filing of th e articles of merg e r by th e
sur i 'iving corporation shall be accepted by tho Division as
tho oquivalont of a Filing of an application for withdrawal,
even if th e surviving corporation has not boon authoriz e d to
transact business in this stat e .
Statutory Authority G.S. 55A-41; 55A-42.1; 55A-70; 55A-72;
55A-81.
.0314 FILING EVIDENCE OF DISSOLUTION
OF FOREIGN NONPROFIT CORP
Th e filing of a copy of any Fmal docum e nt of diooolution
b e aring an original oortifioat i on of th e appropriate ofFioial of
tho state or country of incorporation shall bo doomed a
substitute for and shall have tho samo offoct as tho filing of
an application for withdrawal pursuant to G.S. 55A 72.
Statutory Authority G.S. 55A-72; 55A-81.
.0316 FORM FOR ANNUAL REPORT
A corporation filing its annual report in order to comply
with G.S. 55-16-22 or a limited liability company Filing an
annual report pursuant to G.S. 57C-2-23 must use the
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NORTH CAROLINA REGISTER
November 1, 1995
1570
PROPOSED RULES
annual report form promulgated by the Secretary of State.
Exact copies of the annual report form provided by the
Corporations Division may be made and used to satisfy the
annual filing requirement. However, annual reports with
formats different from the form prescribed by the Corpora-
tions Division will not be accepted for filing.
Statutory Authority G.S. 55-1-21; 57C-1-30.
.0317 AUTHORIZATION OF CORRECTIONS
ON DOCUMENTS
A document that is submitted to the Corporations Division
for filing but rejected because it does not satisfy the require-
ments of Chapter 55. 55A, 57C. or 59 may be corrected by
the examiner in charge of examining the document provided
that the examiner is authorized by the person submitting the
document to make the correction. Upon receiving such
authorization, the examiner shall obtain and record by
memorandum the following information:
(1) the name of the entity to which the document
relates;
(2) the type of document:
(3) the name of the person authorizing the correction;
(4) the name of the person or entity represented by
the person authorizing the correction;
(5) the instructions received by the examiner making
the correction;
(6) the time, date, and manner of the authorization,
including a telephone number by which the person
authorizing the correction may be reached; and
(7) the name of the examiner making the correction.
The memorandum of authorization shall be retained by the
Division with the original of the document so corrected.
Upon request, a copy of the memorandum of authorization
shall be furnished to any person desiring one.
Statutory Authumty G.S. 55-1-25; 55A-1-25; 57C-1-25; 59-
206.
.0318 AUTHORIZATION OF FOREIGN
PROFESSIONAL CORPORATIONS
A foreign professional corporation (as defined in G.S.
55B-16(b)) shall submit with its application for a certificate
of authority to transact business in this State a written
certification by each licensing board authorized to regulate
each professional service proposed to be provided in this
State by the applicant corporation to the effect that such
licensing board has determined that the corporation meets
the definitional requirement of a "foreign professional
corporation" as set forth in G.S. 55B-16rb). Such certifica-
tion shall be made during the six months preceding the date
of submission of the application for certificate of authority
to which it relates.
Statutory Authority G.S. 55-1-30; 55B-3; 55B-16.
SECTION .0400 - CERTinCATION
.0401 DOCUMENTS
(a) Copies of documents filed with respect to a nonprofit
corporation limited liability company may be certified as
chortor documonto its articles of organization only if such
copies begin chronologically with artioloa of incorporation
or oth e r document of incorporation, the articles of organi-
zation, the latest restated ohnrtor articles of organization, or
the latest articles of amendment or articles of merger
purporting to rewrite the charter articles of organization in
its their entity. If requested, the copies to be certified as
chart e r docum e nts the limited liability company's articles of
organization shall include only such beginning document, all
subsequent articles of amendment, and all subsequent
articles of merger. If not otherwise requested, copies to be
certified as chart e r dooum e nts the articles of organization
shall begin chronologically with the latest footntod — e*
rowritton charter restatement and shall include all subsequent
documents on file.
(b) Copies of documents filed with respect to corporations
subject to the provisions of Chapter 55 or Chapter 55A may
be certified as the articles of incorporation of such corpora-
tion only if such copies begin chronologically with the
articles of incorporation or other documents of incorpora-
tion, the latest restated articles of incorporation, or the latest
articles of amendment or articles of merger purporting to
rewrite the corporation's articles of incorporation in their
entirety. If requested, the documents requested to be so
certified shall include only such begiiming document, all
subsequent articles of amendment, and all subsequent
articles of merger. If not otherwise requested, such docu-
ments to be certified shall begin chronologically with the
latest restated or rewritten articles of incorporation and shall
include all related documents subsequently filed.
(c) When certification of a certificate of limited partner-
ship of a domestic limited partnership or a certificate of
authority of a foreign limited partnership is requested, such
certification shall include the original certificate of limited
partnership or certificate of authority and all amendments or
changes thereto.
Statutory Authority G.S. 55-1-30; 55-1-40(1); 55-10-07(e);
55A-1-30; 55A-1-40(1); 55A-10-06(f); 57C-1-03(1); 57C-1-
30; 59-206.
.0402 CERTIFICATION OF FACTS/
CERTIFICATE OF EXISTENCE/
AUTHORIZATION
{«) No certification of facts, certificate of existence, or
certificate of authorization shall contain information relating
to more than one corporation or limited liability company
unless such information pertains to a merger to which such
corporations or limited liability companies were parties.
(b) The foo for each cortificato of oxistonco or cortificate
of authorization for oorpomtions subj e ct to th e provisiono of
Chapter 55 shall b e th e f ee op e oifi e d in G.S. 55 1 22. — Per
corporations subject to tho provisions of Chaptor 55A, th e
foo for each oortification of facts shall bo tho foo spocifiod
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NORTH CAROLINA REGISTER
November 1, 1995
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PROPOSED RULES
in G.S. 55A 77(a)(15) for affixing oortiFicato and sod. — Fef
limitod partn e rshipo, th e f ee for eaoh oortiFiod docum e nt
Bhall b e th e foo spooified in G.S. 59 1106(7).
Statutory Authority G.S. 55-1-28; 55A-1-28; 57C-1-28.
SECTION .0500 - CORPORATE NAME
.0501 GENERAL
(a) The Secretary of State expressly reserves the right
pursuant to G.S. 55-4-01, G.S. 55A 10 G.S. 55A-4-01 ,
G.S. 55-15-06, G.S. 55A 60, G.S. 55A-15-06. G.S. 57C-2-
30, G.S. 57C-7-06, G.S. 59-103, or any other applicable
statute, to reject filing of any document conferring a
corporat e corporate, limited liability company, or limited
partnership name, if he determines that such corporate name
is contrary to law.
(b) With roopoot to oorporationo subjoot to th e provisions
of Chapter 55A, tho Secr e tary of State shall aooopt oono e nt
of a corporation with a nanx ) similar to the name proposed
to bo used by another Gorp>oration ao only one factor in
determining wh e ther ouoh propoaod nam e is contrary to law,
and shall mak e his determination based upon all the oiroum
stances as they appear, when tho proposed name is submit
tod, in acoordoDoo with tho applicable statutoe. — Tho Socro
tary of State, upon r e c e ipt of such a oono e nt, may allow th e
us e of such a propos e d nam e , but shall not p e rmit the use of
a namo which is tho same as a name which is rooor\'od or
rogistorod or which has boon approved for use at that time.
Should th e us e of a name which is id e ntical to on e which i s
reoer^' e d or register e d or which has boon approv e d for us e
bo grontod by orror, the Secretary of State s hall charge no
tax or foo for filing articles of amendment to corroct such
e rror.
("b) (e)When a corporation applies to the Secretary of
State for authorization to use a name which is not distin-
guishable upon his records from names doocribod in G.S.
55 1 01(b) or G.S. 55 15 06(b) a name used, reserved, or
registered by another entity , and provides the consent of
another corporation the other entity to such use, the under-
taking required of the consenting corporation by G.S.
55 4 01(c)(1) or by G.S. 55 - 15 - 06(c)(1) entity shall consist
of the consenting corporation's entity's amendment to the
appropriate document filed with the division effecting a
change of that corporation's entity's name to a name
distinguishable on the records of the Secretary of State from
the name sought to be used by the applying corporation.
entity.
Statutory Authority G.S 55-4-01; 55-15-06; 55A-4-01; 55 A-
15-06; 57C-2-36; 57C-7-06; 59-103.
.0502 WORDS PROfflBITED ESf ADDITION
TO STATUTORY PROHIBITIONS
(a) The words "engineer" or "engineering" or their
derivatives shall not be included in the corporate name for
a corporation unless it is organized pursuant to G.S. Chapter
55B or, if it is a foreign corporation, unless it complies with
Rul e .0312(0) of this Chapter G.S. 55B-16. provided that
the words specified shall not be prohibited in any case
where such words are modified by another word or words
in such manner as to indicate activity other than the practice
of engineering as defined in G.S. 89C-3(b).
(b) The words "surveyor", "survey", "surveying", or
their derivatives shall not be included in the corpwrate name
for a corporation unless it is organized pursuant to G.S.
Chapter 55B or, if it is a foreign corporation, unless it
complies with .0312(o) of this Chapt e r G.S. 55B-16 .
provided that the words specified shall not be prohibited in
any case where such words are modified by another word or
words in such manner as to indicate activity other than tend
HUP i ' e ying the practice of land surveying by registered land
surveyors as defined in G.S. 89C-3(7).
(c) The words "architecture", "architectural", "architect",
or their derivatives shall not be included in the corporate
name for a corpwaration unless it is organized pursuant to
G.S. Chapter 55B or, if it is a foreign corpwration, unless
it complies with .0312(c) of this Chapter G.S. 55B-16 .
provided that the words specified shall not be prohibited in
any case where such words are modified by another word or
words in such manner as to indicate activity other than
dooign of otructuroo the practice of architecture as defined in
G.S. 83A-1(7) or landscape architecture as defined in G.S.
89 A- 1(c).
(d) The word "co-op" shall not be included in the a
corporate name of a oorpwration unless it is orgoniziod of
dom e sticat e d pursmmt to in which the use of the word
"cooperative*^ is prohibited by G.S. 54-139.
(e) When a document is submitted conferring a corporate
name containing the word "wholesale, " unless the purpose
clause of the document indicates clearly that the corp)oration
shall not engage in retail sales, the Corporations Attorney
shall not file the articles unless he fmds, pursuant to written
assurance by the principals or their attorney, that the
corporation shall comply with G.S. 75-29.
(f) The corporate name for a business corporation shall
not contain the word "Realtor."
(g) The corporate name for a business corporation shall
not contain the word "insurance" followed directly by a
corporate ending or the word "insurance" followed directly
by a geographical designation and a corporate ending.
Statutory Authority G.S. 54-139; 55-4-01; 55A-4-01.
.0503 DECEPTIVELY SIMILAR AND
DISTINGUISHABLE NAMES
(a) A namo proposed to bo uood by a corporation subject
to th e provisions of Chapt e r 55A shall not b e p e rmitted
whore it begina v ^ ith tv i 'o or more words which aro the same
as an existing corporate name where the only substantial
diff e r e nc e b e tv ^ ' ee n th e two nam e s is th e addition or d e l e tion
of anoth e r word such ao "oon i 'iooo", "oal e o", "aooooiatoo",
"industries", "ontorprisos", or any other word which doos
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1572
PROPOSED RULES
not indicQto tho typo of businoss to bo purouod by the
oorporation.
(b) A namo propoood to bo UGod by a oorporation oubjeot
to tho provi s ions of Chapter 55A shall not bo pormi tted
whoro tho only substantial difforonco botv ^ 'oon it and on
e xi s ting oorporato nam e io tho addition or del e tion of a
g e ogrophioal designation, unlose Buoh geographical dooigna
tion added is the namo of a cit>' or count)' othor than tho oit)'
or county of tho thon rogistorod office of tho oxist i ng
oorporation. or the geographical dea i gnation deleted io th e
name of a oit)' or count)' oth e r than tho oit)' or count)' of the
rogistorod office of tho proposed corporation. — This provi
sion is subject to G.S. 55A 60.
(a) (o)Word6 indicating oorporatonooo Designations of
entities , such as "company", "cc", "limited", "ltd.",
"corporation", "corp.", "incorporated", "inc.", "profes-
sional association", and "p. a." "p. a.", "limited liability
company". "L.L.C.". "professional limited liability com-
pany", and "limited partnership" shall be disregarded in
determining if a proposed corporate entity name is distin-
guishable upon the records of the Secretary of State (in the
cas e of a corporation subject to th e provieiono of Chapt e r
55) or permiooiblo (in the cas e of a oorporation subj e ct to
Chapter 55A) , provided that such words appear at the end
of the proposed corporate entity name. Such words shall
not be disregarded in such determination when they appear
in the body, rather than at the ending, of the proposed
corporate entity name.
(b) fd)Articles, conjunctions, prepositions, singular or
plural fonns of a particular word, punctuation, spaces, and
the substitution of an Arabic numeral for a word shall be
disregarded in determining whether a proposed coqwrato
entity name is distinguishable upon the records of the
Secretary of State or otherwise permissible for use in a
proposed corporat e entity name.
Statutory Authority G.S. 55-4-01; 55A-4-01; 57C-2-30; 59-
103.
.0504 FILING HCTITIOUS OR ASSUMED
NAME FOR FOREIGN ENTITY
(a) A foreign corporation, limited liability company, or
limited partnership whose corporat e name contains a word
which is prohibited by statute or by Rule .0502 of this
Chapter shall agree to use an assumed or fictitious name as
provid e d in G.S. 55 15 06 or G.S. 55A 60 as a condition of
the issuance of a certificate of authority to transact business
in this State.
(b) A foreign corporation entity which has been granted
authority to transact business in this state, and which desires
to add to or delete from an a ss um e d a fictitious name or to
adopt a fictitious name in order to avoid or remove a
conflict over the use of a name, or which desires to change
its assumed or fictitious name, shall file pursuant to G.S.
55 15 01 or G.S. 55A 71. an application for an amended
certificate of authority.
(c) No axwumod or fictitious name shall be filed with the
Division unless required by statute or administrative rule.
Statutory Authority G.S. 55-15-03; 55-15-04; 55-15-06; 55 A-
15-03; 55A-15-04; 55A-15-06; 57C-7-04; 57C-7-05; 57C-7-
06; 59-103; 59-904; 59-905.
CHAPTER 5 - UNIFORM COMMERCIAL
CODE DIVISION
SECTION .0100 - GENERAL PROVISIONS
.0101 LOCATION AND HOURS
The Uniform Conunercial Code Division of the Depart-
ment of the Secretary of State is located in Room 302,
Legislative Office Building, 300 North Salisbury Street,
Raleigh, North Carolina 27611 27603-5909 . The hours of
the division are 7:30 a.m. to 4450 5:00 p.m. Monday
through Friday. Filing of Uniform Commercial Code
documents may be made from 7:30 a.m. until 3:00 3:30
p.m. No filings will bo made after 3:00 p.m.
Statutory Authority G.S. 25-9-401.
SECTION .0200 - FILING PROCEDURE
.0203 FORMS
(a) Standard Forms. The following forms have been
approved by the Secretary of State for use as standard
fonns:
(1) Form UCC-1 Uniform Commercial Code Fi-
nancing Statement,
(2) Form UCC-2 Uniform Commercial Code Fi-
nancing Statement (for extra copies),
(3) Form UCC-3 Uniform Commercial Code Fi-
nancing Statement Change,
(4) Form UCC-4 Uniform Commercial Code Fi-
nancing Statement Change (for extra copies),
(5) Form UCC-5 Uniform Commercial Code Addi-
tional Sheets,
(6) Form UCC-1 1 Uniform Commercial Code
Request for Information.
Forms UCC-1, 3 and 5 are five part snap-out forms. The
snap-out size of the forms is five inches deep by eight
inches wide. One timo snap out carbons are intorloavod so
ao to print on th e oooond and suooooding parts. Forms
UCC-2 and 4 are identical to the UCC-1 and 3 in size afid
carbon roquiromonts but contain only four parts. Form
UCC-1 1 is a three part snap-out form. The snap-out size of
the form is five inches deep by eight inches wide. On e tim e
snap out carbons ar e interl e av e d oo ao to print on th e s e cond
and third parts.
(b) Non Standard Forms. — Forms submitted which do not
conform to th e standard adopted by tho Socrotar)' of Stat e
will be considered non stxmdard documents. — Th e s e doou
mcnts will require special handling and a fee fwnalty will bo
imposed. This includes approved forms which are accompa
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November 1, 1995
10:15
PROPOSED RULES
niod by non approvod attachmonta. If an approved form ia
roooivod with pag e o 1 , 3 or 3 miBoing it will bo oonoider e d
the original financing atatomont to which it portaina by file
numbor. It muot contain th e following otatomont: — "Th e
g non otandnrd foF Bt; — Pageo 1, 3 and 3 of tho UCC 1, 3, 3, ooourod party no long e r olaimo a ooourit)' int e root undor the
4 , 5, and 11 muot bo gubmittcd intact with the corbono in
place.
(fi^ £b} Procurement of Forms. The Department of the
Secretary of State does not furnish or sell UCC forms.
UCC forms may be purchased from commercial printers.
Anyone wishing to print UCC forms may obtain sj>ecifica-
tions and samples from the Department of the Secretary of
State, UCC Division, 300 North Salisbury Street, Raleigh,
N.C. 37^+4- 27603-5909.
Statutory Authority
25-9-405; 25-9-406.
G.S. 25-9-402(9); 25-9-403(5);
.0204 FEES
Each docum e nt Bubmitt e d for filing muot bo aooompaniod
by tho exact otatutor>' f ee . — Thoo e dooum e nto Documents
which are submitted with no money or with an insufficient
amount will be returned with a note stating the exact amount
of the fee. Fees may be paid by check, money order or
cash. Checks and money orders should be made payable to
the Secretary of State— North Carolina. A list of filing fees
is available upon request.
Statutory Authority G.S. 25-9-403.
.0205 CONTINUATIONS
Continuation statements will be accepted at any time until
during the period beginning six months prior to the expira-
tion of the original document to which it the continuation
statement refers has expired and ending on the date of the
expiration of that document . Accoptanco of the continuation
statem e nt do e s not insur e that th e continuation was fil e d at
tho prop e r tim e . If an original document expires on a
Saturday, Sunday or on a legal holiday on which the office
was closed, a continuation may be filed on the next day that
the office is open for business. Continuations received
which refer to expired documents cannot be filed.
Statutory Authority G.S. 25-9-403.
.0206 TERMINATION
(a) Page number 3 of the approved UCC-1 and UCC-2
has been designed for use as a termination statement.
Whenever a given financing statement is to be terminated
the secured party of record should date and sign this page in
the space provided for termination. The secured party's
signature must appear in this space in order to terminate the
original document. If the signature appears elsewhere on
this form it will not be accepted as a termination.
(b) Form UCC-3 or UCC-4 may be used as a termination
statement. Sections 1, 2, 5, and 7 must be completed. This
form must be signed by the secured party of record.
(o) A written termination stat e m e nt may b e submitted by
the secured party of record. — Thia statement must refer to
financing atatement bearing file numbor as shown." — This
statement muat bo aignod by tho secured party of record.
fd) — Aft e r an asoignment io fil e d, th e aooignoo io oonsid
e r e d tho ooourod part)' of r e cord.
Statutory Authority G. S. 25-9-404.
.0207 FILING BY MAIL
UCC documents may be mailed to the division. The
mailing address is the Department of the Secretary of State,
UCC Division, 300 North Salisbury Street, Raleigh, N.C.
27611 27603-5909 . The document must be accompanied by
the exact statutory fee. When using the standard form send
only the first three pages of the form. Pages 1 and 2 will be
retained by our office. Page number 3 will be returned as
an acknowledgment of filing. If the form arrives with more
than three pages attached the remaining pages will be
discarded. Pages 1, 2, and 3 of the UCC 1, 3, 3, 4 , and 5
muot be submitt e d to b e oonoid e r e d a standard filing.
Acknowledgment of filing is normally mailed in a window
envelojje using the name and address of the secured party on
the UCC form. If the acknowledgment copy is to be mailed
to an address other than that of the secured party a self
addressed envelope should accompany the document. Wh e n
a non standard document ia received by mail which is not
accompanied by on approvod form, a filing receipt ia aont
which oontnino the nam e of th e d e btor and ooour e d part)',
th e fil e numb e r, and tho date and hour of filing. — If th e
filing part)' dosirea a copy with the file numbor and date and
hour of filing noted, a copy should bo aubmitted with tho
requ e st that th e fil e numb e r and dat e and hour of filing b e
not e d on th e copy and r e turn e d.
Statutory Auinority G.S. 25-9-407.
.0208 OVER THE COUNTER FILINGS
Uniform Commercial Code documents may be file
stamped between 7:30 a.m. and 3:00 3:30 p.m. Those
documents received after 3:00 3:30 p.m. on any given day
will be held filed by the filing officer and file stamf>ed with
the following day day's date in order of receipt. Acknowl
e dgment eopiea of documents held and filed tho following
day may b e mail e d or picked up after 7:30 a.m. on tho
following day.
Statutory Authority G.S. 25-9-403.
.0209 REFUNDS
Refunds will be made on overpayment of filing fees in
connection with originaJ Uniform Commercial Code Financ-
ing Statements. R e funds will not b e mad e on oontinuationo,
am e ndm e nts, aooignm e nto or r e l e as e s. — U^ e n overpaymonto
are received in connoction with continuations, amendments.
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1574
PROPOSED RULES
roloaooo — and — aflsignmonto — ri»e — ontiro — documont — Vr^H — be
rotumod with a roqu e et for the oxaot amount du e .
Statutory Authority G. S. 25-9-403.
.0304 OVER THE COUNTER SEARCHES
Over tho oountor ooaroh e o — mny b e made in p e rson.
Individuals dooiring an ovor tho counter ooaroh ahould como
diroctly to tho UCC Division of tho Doportmont of tho
Soorotaiy of State. — CK'or tho oountor o e aroh e o may b e mad e
from 2:00 p.m. until 1:00 p.m. Monday through Fiidny
only. — Tho names and addroasos of tho dobtors to be
soarohod muat be given to a mombor of tho UCC Division.
Tho index will bo ooaroh e d by m e mboro of th e UCC
Divioion only. The dooum e nts will thon bo pr e o e nt e d to th e
s carohing part)' for inapoction. Undof no oiroumotonooo will
documents be removed from the UCC Diviaion.
Statutory Authority G.S. 25-9-407.
.0305 FEES FOR INFORMATION
FROM THE FILING OITICER
Requests for Information will be prooooood rejected if
received with no money. The completed request will be
mailed returned with a note stating the amount due. This
should be paid promptly. Deposit accounts are not available
in order to pay for fees in connection with information
requests. A schedule of fees for information and copy
request is available from the division.
Statutory Authority G.S. 25-9-407.
SECTION .0400 - FEDERAL TAX LIENS
.0404 TELEPHONE REQUEST FOR TAX
LIENS
Telephone roquoets for information on Federal Tax Liona
will not b e acc e pt e d.
Statutory Authority G. S. 44-68. 3.
CHAPTER 6 - SECURITIES DIVISION
SECTION 1600 - REGISTRATION OF
QUALIFIED BUSINESSES
.1601 PURPOSE
The Securities Division of the Office of the Secretary of
State of North Carolina is authorized by Article 4 of
Chapter 105 of the North Carolina General Statutes to
register certain qualified businesses as "Qualifi e d Inv e stment
Organizations". "Qualified Business Ventures" Vonturoa",
and "Qualified Grantee Businesses" as those terms are
defined by G.S. 105-163.010, so that investments in such
qualified businesses are eligible for the income tax credit
provided for by G.S. 105-163.011. Those rules also
establish the procoduro fof filing the fuiol repK)rt required by
St-S: — 105 163.013 whon tho oxistoaoe of a — "qualifiod
inveotm e nt organization" io terminat e d.
Statutory Authority G.S. 105-163.013.
.1 602 PROCEDURE FOR APPLICATION
FOR REGISTRATION
(a) A business which seeks to register as either a "quali -
fiod mvostmont organization", "qualified business venture"
or "qualified grantee biisiness" or to renew such registra-
tion shall make wTitten application to the Securities
Division of the Department of the Secretar\- of State of
North Carolina on an application form entitled "Applica-
tion For Registration as a Qualified Investment Organiza -
tieft/ Qualified Business Venture/Qualified Grantee
Business" furnished upon request by the Securities Divi-
sion.
(b) General Information Required in Application. Each
application for registration shall contain the following
information:
(1) the classification (either Qualifiod Investment
Organization. Qualified Business Venturer or
Qualified Grantee Business) for which the
applicant business seeks to qualify';
(2) an indication as to whether the application is for
the mitial registration of the applicant business,
or for the renewal of a registration;
(3) the full legal name of the applicant business;
(4) the street address and, if different, the mailing
address of the principal office of the applicant
business;
(5) the telephone number and the Employer Identi-
fication Number of the applicant business;
(6) the date on which the applicant business' fiscal
year ends;
(7) the t>"pe of busmess organization of the appli-
cant business, and a copy of the documents, if
any. under which the applicant business is
organized (for e.xample. the articles of incorpo-
ration or organization ; the certificate of limited
partnership; trust documents; certificate of
assumed name; etc.);
(8) the name of the authorized representative of the
applicant business, his title, street address,
mailing address (if different from street ad-
dress), and telephone number; and
(9) if the applicant business is a corporation or
limited liabilits company, the date of and state
of incorporation or organization, organization,
fW) a representation that the applicant business has
disclosed or will disclose to its investors that a
tax credit pursuant to G.S. 105 163.011 is not
available for on investment in the applicant
business until the following rcquiromcnta have
been satisfied:
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NORTH CAROLINA REGISTER
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PROPOSED RULES
(A) — the applicant buoinooa muot have boon dooig
natod by th e Soouriti e o Division as eith e r a
qualified invootmont organization, a qualifi e d
businosB vonturo, or u qualified grantoo buoi
no93, aa those tonnfl are dofinod by G.S.
105 163.010;
(B) all otatutor)' limito on the tax credit for inv e st
monts in qualified busines s es must have boon
diBcloaod to the investors; and
^€) — th e inv e ntor muot have roquooted and rooeivod
from the S e ouritieo Divioion a oortifioat e
stating that invostmonta in the applicant buai
no9B aro eligible for the inoomo tax credit of
G.S. 105 163.011. and must have attach e d
ouch oortifioate to th e application mad e to
claim the tax credit aubmittod by the invootor
to the Socrotnr)' of Rovonuo.
If, at the tim e th e applioation for r e gistration io submitt e d,
the diooloouroo r e quired by Item (b) (10) (B) of this Rul e
have boon made to the invootors, the applicant business shall
attach to its application for registration written ovidonoo of
ouoh diooloour e o.
(o) Speoifio Information R e quired Qualifi e d Invootmont
Organization. — The application for registration as a "qimli
fiod invootmont organizat i on" shall oontain the following
information and repr e o e ntations on a form e ntitled "Attach
mont A — Qualifi e d Inv e otm e nt Organization" availabl e upon
roquost from the Socuritios Division:
^43 a cortification that tho facts sot forth in G.S.
105 163.013(a) (1) (5) apply to th e applicant
buoinooD; and
(2) in applications for renewal of regi s tration as a
qualified invootmont organization, a schodulo
doooribing the applicant buoinooa' invootmonto in
qualified buoineoo v e ntures and qualifi e d grant ee
buainooaoo, aubmittod on a form entitled "Attach
mont A 1 Schodulo of Investments in Quali
fi e d Buoin e sB Vonturoo and Qualifi e d Grant ee
Buoineoooo" — available upon r e qu e st from th e
Socuritioo Diviaion.
{4i) {c} Specific Information and Representations Required
— Qualified Business Venture. The application for registra-
tion of a "qualified business venture" shall contain the
following information and representations on a form entitled
"Attachment B A— Qualified Business Venture" available
upon request from the Securities Division:
(1) a certification that the facts set forth in G.S.
105-163.G13(b) (l)-(4) (6] apply to the applicant
business, and a letter which:
(A) describes the business activities in which the
applicant business is or will be engaged;
(B) describes how such activities meet the require-
ments of G.S. 105-163.013(b)(3);
(C) states whether the applicant business is or will
be engaged in any of the activities listed in
G.S. 105-163.013(b)(4); and
(D) states either an estimate of the percentage of
the gross revenues expected to be generated by
the activities listed in G.S. 105-163. 013(b)(4)
(for businesses organized after January 1 of
the calendar year in which the application is
filed) or the actual percentage of gross reve-
nues generated by such activities (for busi-
nesses organized prior to January 1 of the
calendar year in which the application is filed) .
(2) in the event that the applicant business has
agreed to establish its headquarters and principal
business operations in North Carolina for the
purpose of qualifying investments for the tax
credit, an undertaking that the applicant will
notify in writing the Securities Division of the
Department of the Secretary of State of North
Carolina immediately upon the occurrence of
any of the following:
(A) the receipt of the first investment in the appli-
cant business for which a tax credit pursuant to
G.S. 105-163.011 is claimed;
(B) the establishment by the applicant business of
its headquarters and principal business opera-
tions in North Carolina; or
(C) the failure of the applicant business to establish
its headquarters and principal business opera-
tions in North Carolina within three months
following the first investment in the applicant
business for which a tax credit pursuant to
G.S. 105-163.011 is claimed;
(3) an undertaking to immediately notify in writing
the Securities Division of the Department of the
Secretary of State of North Carolina of the date
on which either the headquarters or the principal
business operations of the applicant business are
removed from North Carolina, in the event that
the applicant business does not retain its head-
quarters or principal business operations in
North Carolina for a period of at least three
years following the date of each investment in
that business for which a tax credit is claimed;
and
(4) in initial applications for registration as a quali-
fied business venture, a statement that the app li-
cant business has been organized after January 1
of the calendar year in which the application is
filed or a financial statement for its most recent
fiscal year, certified by an independent certified
public accountant, showing that the applicant
business had revenues of five million dollars
($5,000,000) or less, determined on a consoli-
dated basis using generally accepted accounting
procedures; and
(5) in applications for renewal of registration as a
qualified business venture, a financial statement
for the most recent fiscal year prepared in the
same manner and containing the same informa-
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1576
PROPOSED RULES
tion as the statement described in Subparagraph
(c)(4) of this Rule and, if the applicant business
engages in any of the activities set forth in G.S.
105-163.013(l))(4). showing the percentage of
gross revenues generated by such activities.
(e) (dj Specific Information and Representations Required
-- Qualified Grantee Business. The application for registra-
tion of a "qualified grantee business" shall contain the
following information and representations on a form entitled
"Attachment G B — Qualified Grantee Business" available
upon request from the Securities Division:
(1) a certification that the facts set forth in G.S.
105-163. 013(c) (l)-(3) apply to the applicant
business, and written evidence of the receipt of
the grant or funding required by G.S.
105-163. 013(c)(3) within the three years preced-
ing the date of the application for registration or
for renewal of registration;
(2) in the event that the applicant business has
agreed to establish its headquarters and principal
business operations in North Carolina for the
purpose of qualifying investments for the tax
credit, an undertaking that the applicant will
notify in writing the Securities Division of the
Department of the Secretary of State of North
Carolina immediately upon the occurrence of
any of the following:
(A) the receipt of the first investment in the appli-
cant business for which a tax credit pursuant to
G.S. 105-163.011 is claimed;
(B) the establishment by the applicant business of
its headquarters and principal business opera-
tions in North Carolina; or
(C) the failure of the applicant business to establish
its headquarters and principal business opera-
tions in North Carolina within three months
following the first investment in the applicant
business for which a tax credit pursuant to
G.S. 105-163.011 is claimed;
(3) an undertaking to immediately notify in writing
the Securities EHvision of the Department of the
Secretary of State of North Carolina of the date
on which either the headquarters or the principal
business operations of the applicant business are
removed from North Carolina, in the event that
the applicant business does not retain its head-
quarters and principal business operations in
North Carolina for a period of at least three
years following the date of each investment in
that business for which a tax credit is claimed;
and
(4) documentary evidence of the receipt of the grant
or funding certified to in Item (^ (d) (1) (C) of
this Rule.
(^ (e} Signing of the Application. Each application for
registration shall be signed by the authorized representative
of the applicant business, and each application shall contain
the following oath or affirmation by the signing authorized
representative: "Under penalties prescribed by law, I o e rtify
ft«4 hereby swear and/or affirm that to the best of my
knowledge and belief this application is true and complete. "
This statement shall be verified by a person duly authorized
to administer oaths.
(g) £f) Filing Fee. The filing fee for an initial application
for registration as a qualifi e d invoetmont organization,
qualified business venturer or qualified grantee business
shall be One Hundred Dollars ($100.00). The filing fee for
a renewal of registration as a qualified business shall be fifty
dollars ($50.00). The filing fee shall be payable by check,
made payable to the order of "SECRETARY OF STATE",
and shall accompany the application for registration.
(fe) £g} Where to File Application for Registration. All
applications for registration shall be filed by ttiailing the
application, together with any supplemental schedules or
statements and the filing fee, to:
QUAUFIED BUSINESS REGISTRATION
Department of the Secretary of State
Securities Division
Room 10^ Suite 100
300 North Salisbury Street
Raleigh, North Carolina 27^44 27603-5909 .
(i) £h) Due Date for Filing Application for Registration.
The initial application for registration shall be filed prior to
making of the investment for which an income tax credit
pursuant to G.S. 105-163.011 will be claimed. The applica-
tion for renewal of registration shall be filed with the
Securities Division no later than the 15th day of the third
month following the close of the applicant business' fiscal
year.
^ £i) Review of Application; Notification of Qualification
Status.
(1) The date of filing of all applications for registra-
tion (both initial and renewals) shall be recorded
at the time of receipt by the Securities Division
and shall not be construed to be the date of
mailing. Recordation of the date of filing does
not indicate that the application is complete.
(2) The Administrator of the Securities Division
shall review all applications and designate those
he determines to be complete. In the event that
the administrator determines that an application
is incomplete in any respect, the applicant will
be notified of the application's deficiencies
within 15 days. i\d inoompl e te applioation ohall
be rosubmittod. Except as provided in Subpara-
graph (i)(3) of this Rule, if the applicant does
not remedy such deficiencies within 60 days
following a deficiency notice from the Division.
the application shall be rejected.
(3) Upon examination of the application for registra-
tion, the administrator shall determine whether
the applicant business meets the requirements for
classification oa a qualifiod invostmont orgoniza
tiefi, qualified business venture venture, or
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10:15
PROPOSED RULES
qualified grantee business, as the case may be.
If an applicant for registration as a qualified
business venture was organized prior to January
1 of the calendar year in which the application is
filed and is unable to produce the financial
statement described in Subparagraph (c)(4) of
this Rule without undue hardship, the Division
may grant a conditional registration to the appli-
cant, subject to the applicant's furnishing to the
Division a financial statement meeting the re-
quirements of Subparagraph (c)(5) of this Rule
within five months following the end of the
a pplicant's current fiscal year. If such a finan-
cial statement is not filed with the Division
within the period provided by this Rule, the
applicant's conditional registration shall be
cancelled as of its initial effective date. When
the determination has been made, the administra-
tor shall notify the applicant business of its
determination and that persons interested in
tax-favored investments with respect to the
applicant business may obtain from the Securi-
ties Division certificates of such qualified status.
(4) The submission of any false or misleading
information in connection with an application for
registration shall be grounds for rejection of the
application and/or revocation of the registration.
Statutory Authority G.S. 105-163.013.
.1604 OBTAINING CERTIFICATES OF
REGISTRATION
Persons who contemplate investment in a qualified
invootm e nt organization, a qualified business venture^- or a
qualified grantee business may obtain a certificate stating
that an applicant business has registered as a "qualified"
business with the Securities Division of the Department of
the Secretary of State and has met all requirements of
qualification by requesting such certificate in writing from:
CERTinCATE OF QUAUFIED STATUS
Department of Secretary of State
Securities Division
Room 'lO'l Suite 100
300 North Salisbury Street
Raleigh, North Carolina 37444 27603-5909 .
Statutory Authority G.S. 105-163.013.
.1605 REPORTING REQUIREMENT/
TERMINATION/QUALIFIED
INVEST ORG
Whon tho oxiatonco of a businosa rogiatorod aa a qualified
invostmont organization is torminatod, the businosa must file
a final r e port with th e S e ouritioo Divioion of tho Department
of tho Soor e tar)' of State. — In the final r e port, the buoinooa
must include tho following information:
(4) its name and addreas;
(3^
(3)-
itfl employer idontifieation number;
th e nam e , addrooo, titl e , and tel e phon e number of
ito ouoo e ooor in intoroot or peroon authorized to
file the final report;
(4) tho date (approximate) on which tho oxiatonco of
th e buoinooo will bo or woo terminat e d;
(5) a d e ooription of ito invootmento in qualified buoi
noaa v e ntures and qualified grantee buaineaaoa aa
of tho date of torminat i oa t
(6) a o e rtifioation that it invootod at leant 70 poroont of
ito capital in e quit)' ooouritioo or oubordinat e d debt
of qualified buainoao ventures or qualified grantee
buainea s e e ; and
f7^ an affirmation of th e p e roon filing tho final roport
in th e following form: — "Und e r p e nalti e o pro
s cribed by law, I certify and affirm that to the be s t
of my knowledge and belief tho informa tiea
contain e d in thio Final R e port is tru e and oom
pl e t e . "
The final roport shall bo in letter form and shall bo filod by
moiling it to tho addresa at which the buoinooa had filed ita
applicat i on — for r e giotration. No fee io requir e d to bo
submitt e d with th e final roport.
Statutory Authority G.S. 105-163. 013(a).
.1607 FORMS
For use in registering as a qualified business or in renew-
ing a registration as a qualified business pursuant to G.S.
105-163.013, the following form is available fi^om the
Securities Division upon request: Application For Regis-
tration As A Qualified Investment Organization/ Qualified
Business Venture/Qualified Grantee Business.
Statutory Authority G.S. 105-163. 013(d).
CHAPTER 7 - NOTARY PUBLIC
DIVISION
SECTION .0300 - NOTARY PUBLIC
EDUCATION PROGRAM
.0302 INSTRUCTORS
(a) In order to be certified to teach a course of study for
notaries public, an instructor must:
(1) compl e t e a six hour inetruotor'a oouro e taught by
th e notari e o public d e puty or other peroon ap
proved by the Secretary of State with a grade of
not lo s s than 8 0; transmit a written request for
certification as a notary public instructor to the
notaries public deputy, together with evidence of
six months of active experience as a notary
public:
(2) hav e oix months activ e oxporionoo ao a notary
public; provid e d that r e gist e rs of d ee ds, th e ir
aaaiatanta and deputies, clorka of court, thoir
oaaiotonta and deputioa and practicing attomoya
10:15
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November 1, 1995
1578
PROPOSED RULES
at law shall bo oxompt from this roquiromont;
pay a fee to the Notary Public Division for
participation as a student in the notary public
instructor course taught pursuant to G.S. lOA-
4(d)(1). which fee shall reflect the cost of mate-
rials, facilities, and meals, if any, related to the
giving of that course of instruction: and
(3) purchoso on approved notar>' public manual-
achieve a passing grade of at least 80 per cent
correct responses on a test administered in
conjunction with the notary public instructor
course.
(b) Certification shall be offcxtivo for tv . 'o years and may
bo ronewod by taking a r e oortifioation oourao taught by the
notari e s public doput>' or oth e r p e rson approv e d by th e
Scorctar)' of State. Persons who fail to achieve a passing
grade on the final test administered in conjunction with the
notary public instructor course may reapply to take the test
one additional time.
(c) Persons seeking recertification as a notary public
instructor must apply to the notaries public director for
recertification and must again satisfy the requirements of
G.S. 10A-4(d) and Paragraph (a) of this Rule.
Statutory Authority G.S. lOA-4.
TITLE 21 - OCCUPATIONAL LICENSING
BOARDS
CHAPTER 18 - BOARD OF EXAMINERS
OF ELECTRICAL CONTRACTORS
Notice is hereby given in accordance with G.S.
150B-21.2 that the State Board of Examiners of Electri-
cal Contractors intends to amend rules cited as 21 NCAC
188.0103, .0207, .0303. .0402. .0601. .0902; repeal 183
.0903 and .0905.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conducted at 8:30 a.m. on
December 7, 1995 at the State Board of Examiners of
Electrical Contractors, 1200 Front Street, Suite 105,
Raleigh, NC 27609.
Reason for Proposed Action:
21 NCAC 183 .0103 - To delete provisions now addressed
by statute and to correct time of meetings.
21 NCAC 183 .0207 - To change examination application
filing deadline.
21 NCAC 183 .0303, .0601 and .0902 - Update to conform
with statutory changes.
21 NCAC 183 .0402 - To add provision for notice of
address and telephone change.
21 NCAC 183 .0903 aiid .0905 - Consolidated with Rule
.0902.
Comment Procedures: Persons interested may present
written or oral statements at the public hearing or in writing
prior to the hearing by mail addressed to: Robert L.
Brooks, Jr. , State Board of Examiners of Electrical Contrac-
tors, PO Box 18727, Raleigh, NC 27619.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government finds.
SUBCHAPTER 18B - BOARD'S RULES
FOR THE IMPLEMENTATION OF THE
ELECTRICAL CONTRACTING LICENSING ACT
SECTION .0100 - GENERAL PROVISIONS
.0103 ORGANIZATION
fa) Terms of Offioors. — Th e one y e ar term of the ohair
man. vioo ohoirmon and s e orotoiy tr e asur e r shall oomm e no e
on July 1 . — If the apfwintmont or doaignation of a now
member of the Board is delayed beyond this date, those
offic e rs shall continu e in offio e during the int e rim, and tho
e lection of new offio e rs shall ho for only th e bolano e of th e
yoar remaining aftof tbo appointment or dooignation is mado.
(a) fte)Executive Director. The Board shall employ a
full-time executive director whose duties shall be to manage
and supervise the office and staff in carrying out the fwlicies
and directives of the Board. The executive director shall
handle all administrative duties of the Board and such other
duties as the Board may from time to time assign. The
executive director is designated the legal process agent for
the Board uf»n whom all legal process may be served. The
compensation of the executive director shall be fixed by the
Board.
(b) f©)Committees. TTie chairman of the Board may
appoint regular, special, and special advisory committees.
Regular committees facilitate prescribed phases of the
Board's duties and operations. Special committees under-
take specific assignments of the Board. Special advisory
committees assist the Board's regular or special committees
with specific board assignments.
(c) fd)Meetings. The regular quarterly meetings of the
Board shall begin at 9^QQ 8:30 a.m., unless some other
place or time is set by the Board. Sp>ecial meetings may be
held at places and times deemed by the chairman to be
suitable to accomplish the necessary purposes for which the
meetings are held.
Statutory Authority G.S. 87-39; 87-40; 87-42.
SECTION .0200 - EXAMINATIONS
.0207 APPLICATION FOR REGULAR
SE\n-ANNUAL EXAMINATIONS
(a) To be eligible for consideration, applications for
regular semi-annual examinations must be filed with the
Board not later than Januaiy 45 \ for the March semi-annual
1579
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November 1, 1995
10:15
PROPOSED RULES
examination and not later than July 4# i for the September
semi-annual examination.
(b) The Board's staff is empowered to determine whether (c)
or not applications are duly filed in accordance with Rule
.0210 of this Section, to process all duly filed applications,
and to return all applications not duly filed.
Statutory Authority G.S. 87-42; 87-43.3; 87-43.4. (d)
SECTION .0300 - DEFTNITIONS AND
EXPLANATIONS OF TERMS
APPLICABLE TO LICENSING
.0303 ELECTRICAL INSTALLATION: PROJECT: (e)
PROJECT VALUE-LIMITATION
For the purpose of implementing G.S. 87-43.3 pertaining
to the limited and intermediate electrical contracting license
classifications, the following provisions shall apply: (f)
(1) Electrical Installation. Electrical work is con-
strued to be an electrical Installation when the
work is made or is to be made:
(a) in or on a new building or structure;
(b) in or on an addition to an existing building or
structure;
(c) in or on an existing buUding or structure, includ-
ing electrical work in connection with Ughting or (3)
power rewiring or with the addition or replace-
ment of machines, equipment or fixtures; or
(d) in an area outside of buildings or structures,
either overhead or underground or both.
(2) Project. An electrical installation is construed to
be a separate electrical contracting project if all
the following conditions are met:
(a) the installation is, or will be, separate and (4)
independently supplied by a separate service,
feeder or feeder system; and
(b) the installation is for:
(i) an individual building or structure which is
separated from other buildings or structures by
a lot line or, if located on the same lot with
other buildings or structures, is physically
separated from such other buildings or struc-
tures by an open space or by a 75 poroont
solid maoonry firo wall at looot 1 2 inohos thick
an area separation fire wall ; (a)
(ii) an individual townhouse single-family dwelling
unit constructed in a series or group of at-
tached units with property lines separating such
units;
(iii) an individual tenant space in a mall-type shop-
ping center;
(iv) an addition to an existing building or structure;
(v) an existing building or structure, including
electrical work in connection with lighting or
power rewiring or with the addition or replace- (b)
ment of machines, equipment or fixtures; or
(vi) an outdoor area either overhead or under-
ground or both,
the negotiations or bidding procedures for the
installation are carried out in a manner totally
separate and apart from the negotiations or
bidding procedures of any other electrical instal-
lation or part thereof;
except for new additions, alterations, repairs or
changes to a pre-existing electrical installation,
no electrical interconnection or relationship
whatsoever will exist between the installation
and any other electrical installation or part
thereof;
a separate permit is to be obtained for each
individual building structure or outdoor area
involved from the governmental agency having
jurisdiction; and
if a question is raised by a party at interest or if
requested by the Board or Board's staff for any
reason, the owner or the awarding authority or
an agent of either furnishes to the Board, and to
the insp)ections department having jurisdiction, a
sworn affidavit confirming that each and every
one of the conditions set forth in (2)(a) through
(e) of this Rule are satisfied.
Relationship of Plans and Specifications to Defmi-
tion of Project. Even though such electrical work
may not fully comply with each and every condi-
tion set out in Subparagraph (2) of this Rule, the
entire electrical work, wiring, devices, appliances
or equipment covered by one set of plans or
specifications is construed to be a single electrical
contracting project.
Project Value Limitation. In determining the
value of a given electrical contracting project, the
total known or reasonable estimated costs of all
electrical wiring materials, equipment, fixtures,
devices, and installation must be included in
arriving at this value, regardless of who furnishes
all or part of same, and regardless of the form or
type of contract or subcontract involved. As an
example, on a given electrical contracting project,
the owner or general contractor will furnish all or
part of the electrical wiring, material, etc. and
if the total cost of the wiring, materials, etc.,
including that ftimished by others, plus the total
cost of the installation involved, will be more
than aovontoon thousand five hundred dollars
($17.500) twenty-five thousand dollars ($25,000)
but not more than seventy-five thousand dollars
($75,000), then only an electrical contractor
holding either an intermediate or unlimited
license wiU shall be eligible to submit a proposal
or engage in the project.
if the total cost of the wiring, materials, etc.,
including that furnished by others, plus the total
cost of the installation involved, will exceed
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November 1, 1995
1580
PROPOSED RULES
seventy-five thousand dollars ($75,000), then
only an electrical contractor holding an unlimited
license will shall be eligible to submit a prop>osal
or engage in the project.
If a given electrical contracting project is subdivided into
two or more contracts or subcontracts for any reason, then
the total value of the combined contracts or subcontracts
which can be awarded to or accepted by any one licensee of
the Board must be within the total project value in accor-
dance with this Rule.
The Board's staff is empowered to make a determination
of what constitutes a project in any given situation, and any
party at interest shall have the right to appeal any staff
determination to the Board for a final binding decision.
Statutory Authority G.S. 87-42; 87-43; 150B-11(1).
SECTION .0400 - LICENSING REQUIREMENTS
.0402 LICENSE NAME REQUIREMENTS
(a) Issuance of License. No license shall be issued by the
Board in a name which is the same as or similar to the name
in which a license has already been issued. The Board's
staff is empowered to determine whether or not the name
requested on a license application is the same as or similar
to the name in which a license has already been issue. If
any license applicant objects to the staffs determination, he
may appeal to the Board for a final determination.
(b) Name In Which Business Must Be Conducted. All
electrical contracting business, including all business
advertising and the submission of all documents and papers,
conducted in the state of North Carolina by a licensee of the
Board shall be conducted in the exact name in which the
electrical contracting license is issued.
(c) Notification of Address and Telephone Change. All
licensees shall notify the Board in writing within 30 days of
any change in location or mailing address and telephone
number.
Statutory Authority G. S. 87-42.
SECTION .0600 - RECLASSIFICATION OF
FORMER CLASS I AND CLASS II LICENSES
A>fD QUALIFIED INDIVIDUALS
.0601 LICENSES EXPIRING AND INDIVIDUALS
QUALIFIED/JULY 1, 1970
(a) Inactive Class I Licensee or Individual. Subject to
Section .0400 of this Subchapter, any licensee whose last
active license was a Class I license that expired on or before
June 30, 1970, or any listed qualified individual who was
last indicated as such on a Class I license that expired on or
before June 30, 1970, and currently has Class I license
qualifications is entitled to receive, without written examina-
tion, a license in either the limited, intermediate or unlim-
ited classification upon:
(1) filing an application with the Board designation
the class license desired; and
(2) paying the annual license fee for the license
classification desired.
(b) Initial Choice of license Classification. The inactive
Class 1 licensee or Class I qualified individual is entitled to
initially choose either the limited, intermediate or unlimited
license. Thereafter the same requirements which apply to
new applicants must be met to obtain a license in a classifi-
cation higher than the license initially chosen.
(c) Inactive Class II Licensee or Individual. Subject to
Section .0400 of this Subchapter, any licensee whose last
active license was a Class II license that expired on or
before June 30, 1970, or any listed qxialified individual who
was last indicated as such on a Class 11 license that expired
on or before June 30, 1970, and currently has Class II
license qualifications is entitled to a license in either the
limited, intermediate or unlimited license classification
without written examination upon meeting the requirements
for the particular license classification as follows:
(1) To obtain a limited license, the applicant must:
(A) file an appUcation with the Board requesting a
limited license; and
(B) pay the annual fee for the limited license.
(2) To obtain an intermediate license, the applicant
must:
(A) file an application with the Board requesting an
intermediate license;
(B) pay the annual fee for the intermediate license;
and
(C) furnish to the Board, on a form provided by
the Board, a statement from a bonding com-
fjany Ucensed to do business in North Carolina
certifying the applicant's ability to furnish a
performance bond for electrical contracting
projects in excess of oovontoon thouaand fivo
hundred dollars ($17,500) twenty five thousand
dollars ($25.000) or submit other information
regarding Jh« the applicant's financial and
business qualifications for evaluation by the
Board.
(3) To obtain an unlimited license, the applicant
must:
(A) file an application with the Board requesting an
unlimited license;
(B) pay the annual fee for the unlimited license;
and
(C) furnish to the Board, on a form provided by
the Board, a statement from a bonding com-
pany licensed to do business in North Carolina
certifying the applicant's ability to furnish a
porformift g performance bond for electrical
contracting purjxises in excess of seventy-five
thousand dollars ($75, OCX)) or submit other
information regarding hM the a pplicant's
financial and business qualifications for evalua-
tion by the Board.
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PROPOSED RULES
Statutory Authority G.S. 87-42; 87-49.
SECTION .0900 - VIOLATIONS AND
CONTESTED CASE HEARINGS
.0902 CHARGES AND PRELIMINARY
PROCEDURES
;\ny |x>rgon v i ho boliovoa that any applicant, qunlifiod
individual or liconsoo of the Board is in violation of th e
provioiono of G.S. Chapter 8 7, Artiolo ^, or Titl e 21,
Subohaptor 1 8 B. of tho North Carolina Administrativ e Cod e
may profor chargoB by filing a written statomont with the
Boaixl'a staff in tho Board'o office, iwtting out the partioularo
of th e ohargoo, including, but not limited to, tho natur e , dat e
and plaoo of th e alleged violation.
(a) The authority given to the Board's executive director
in this Rule shall include the executive director's authority
to delegate to other members of the Board's staff.
(b) Charges filed pursuant to G.S. 87-47(a4) shall be
handled according to the progressive steps set out in
Paragraphs (c) through £fl of this Rule.
(c) A charge shall be handled initially by the executive
director. The executive director may, without a hearing,
dismiss it as unfounded or trivial. Unless it is dismissed,
the executive director shall:
(1) issue and cause to be served on the accused a
written notice of violation, including a repri-
mand, or including an assessment of a civil
penalty in a specific amount pursuant to G.S.
87-47("a3) and a reprimand: or
(2) give the accused written notice of the charge,
including a request that the accused respond to
it in writing within 20 days.
(d) The executive director may, upon receipt and evalua-
tion of the response, dismiss the charge as unfounded or
trivial without a hearing, or the executive director may turn
the matter over to the Board's disciplinary review commit-
tee.
(e) The disciplinary review committee may, without a
hearing, dismiss the charge as unfounded or trivial. Unless
it is dismissed, the committee shall:
(1) issue and cause to be served on the accused a
written notice of violation, including a repri-
mand, or including an assessment of a civil
penalty in a specific amount pursuant to G.S.
87-47(a3) and a reprimand; or
(2) recommend to the Board that a penalty or penal-
ties be imposed pursuant to G.S. 87-47(a2) and
(a3) or that an offer in compromise pursuant to
G.S. 87-47(e) be accepted.
(f) The Board may, without a hearing, dismiss the charge
as unfounded or trivial. Unless it is dismissed, the Board
shall:
(n issue and cause to be served on the accused a
written notice of violation, which shall include
the imposition of a penalty or penalties pursuant
to G.S. 87-47(a2) and (a3). and which may
include notice that the Board will accept an offer
in compromise pursuant to G.S. 87-47(e): or
(2) set an administrative hearing on the charge,
notice of which may include a statement that the
Board will accept mi offer in compromise pursu-
ant to G.S. 87-47(e').
(g) Before an administrative hearing is held, the Board
may direct the disciplinary review committee to meet with
the accused and the complainant in a final effort to effect a
settlement.
(h) Each notice of violation shall include a statement of the
right to request a hearing, pursuant to G.S. 87-47(a4).
Statutory Authority G.S. 87-42; 87-47.
.0903 PRELIMINARY DETERMINATION
(a) A charge filed in aooordonco with Rule .0902 of this
S e ction ohall b e handled initially by th e Bourd'o e xooutivo
dir e ctor or hio staff deoign ee , — who may dismioo it as
unfounded, frivolous, or trivial.
(b) UnleGQ tho charge is dismiosod pursuant to Paragraph
(a) of this Rul e , th e e x e cutiv e director or his s taff deoignee
ahall notify' th e aoouo e d in writing. Suoh written notice shall
set forth tho allogod facto and oireumstfmoo fl oo contained in
tho written statement filed with the Board and shall bo given
p e rsonally or by c e rtifi e d mail, return r e c e ipt r e quested.
Suoh writt e n notic e shall contain a request for the aoouo e d
to answer in writing within 20 days from the date tho notioe
of chorgos is rocoivod, as shown on tho rotumod rocoipt or
from th e date of p e rsonal delivery of th e notio e of ohargoo.
(«^ — If the aoouoed admits to th e ohargoo and if, in th e
opinion of tho oxocutiv e director or his staff designoo, tho
ohargoo do not merit review by tho Board's disoiplinory
r e vi e w oommitt ee , — th e e x e outivo — dir e ctor or hio staff
designee shall acc e pt th e aoous e d'o admission of guilt and
issue a reprimand on behalf of tho Board. — Tho reprimand
shall include an order to tho accused to refrain from
violating G.S. Chapt e r 8 7, i\rtiol e ^, or 21 NCAC Subohap
t e r 1 8 B in the future.
(4) — If tho accused admits to the charges and if, in tho
opinion of tho oxocutive director or hi s staff designoo, the
ohargeo merit review by tho Board's disciplinary r e vi e w
oommitte e , th e e xecutive dir e ctor or his staff d e sign ee shall
rofor tho charges to tho committee. — After reviewing tho
charges, tho committee shall moke a preliminary determina -
tion of the ohargeo and reoommend to th e Board whioh, if
any, of tho actions listed in Paragraph (g) should b e tak e n
against tho aoouoed.
ffr) — If tho accused does not respond to or denies the
charg e s, th e Board's executiv e dir e ctor, his staff d e oigne e or
other d e oignatod invootigativ e p e rsonn e l ohall inv e otigat e th e
allegations contained in tho charges and tho oxocutive
director or his staff designee may dismiss thorn as un
found e d, frivolous or trivial, or may r e f e r th e oharg e o,
inv e stigativ e findingo and all availabl e e vid e nc e to th e
Board's disciplinary review committee for review. — From
such reviow, tho disciplinary' review oommittoo shall mako
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1582
PROPOSED RULES
a prolimirmo' dotormination of the chargoa and rocommond
to tho Board whioh, if any, of th e aotiono liotod in Paragraph
(g) should b e takon against tho aoous e d.
ff) — Tho ohargos. invoetigativo findings, ovidonoo and
diapooition of oaoh cooo s hall bo plaood in a pormanont File
of tho goouo e d. — "Whon a sooond charg e io filod againot th e
aoouo a d during a period of 12 montho or a third ohargo io
Filod againot tho acxjuood during any pwriod of time, the
oxocutivo diroctor or hi s staff doaignoo ohall prooont the
aooucod'B file to tho Board's diooiplinar>' r e vi e w oommitt ee
for g dotailod ros' i ow. — From Buoh review, the diooip l inary
review committee shall mako a proliininary determination of
tho new chargco filed against tho accused and recommend to
tho Board v . ihgt gotion, if any, ohould bo tak e n againot tho
aoous e d ao proooribod in Paragraph (g) of thio Rul e .
(g) In aocordaneo with Paragraphs (d) — (f) of this Rule,
tho Boaixi' s disciplinary' review committoo shall rooeivo and
r o viesv the aoous e d'o fil e and from such review th e commit
too shall mak e a preliminary determination — and r e comm e nd
to tho Board that ono or more of tho following actions bo
token:
fi^ tho ohargoo b e dismioo e d as unfound e d, frivo
louo. or trivial;
(i) a letter of caution be issued to the liconsoo by
the Board;
(5) in a oaoo of admiooion of guilt, a l e tter of ropri
mand bo iocu e d to the lic e ns ee by th e Board; or
f4^ tho case be presented to the Board, excluding
board members who participated in the prelimi
nar)' determination, for an administrativ e h e aring
to bo conduct e d in aooordanoe with G.S. 8 7 17
and Chapter 150B, Article 3A, of th e North
Carolina General Statues and tho rules adopted
by the Board pursuant thereto, or for th e aco e p '
tano e of an offer in oompromioo of th e charg e ,
as provided by G.S. 8 7 4 7(o).
Statutory Authority G.S. 87-42: 87-47; 150B, Article 3 A.
.0905 JUDICIAL REVIEW
Any applicant, qualified individual or licensee who is
aggriev e d by a final d e cision of th e Board aft e r a cont e st e d
cas e h e aring is e ntitl e d to judicial r e vi e w of th e d e cision as
provided by G.S. Chaptor 150B, Article 4 .
Statutory Authority G. S. 87-47; 150B-43.
CHAPTER 26 - LICENSING BOARD
OF LANDSCAPE ARCHITECTS
Notice is hereby given in accordance with G.S.
150B-21.2 that the North Carolina Board of Landscape
Architects intends to amend rule cited as 21 NCAC 26
.0307.
Proposed Effective Date: February 1, 1996.
A Public Hearing will be conduaed at 10:00 a.m. on
November 20, 1995 at the North Carolina Board of Land-
scape Architects, 3733 Benson Drive, Raleigh, NC 27609.
Reason for Proposed Action: To simplify Continuing
Education requirement. Also, easier maintenance of record
keeping.
Comment Procedures: Any interested person may present
comments by oral presentation or by submitting a written
statement. Persons wishing to make oral presentation should
contaa Mr. Robert Upton, 3733 Benson Dr., Raleigh, NC
27609. Telephone »9 19-850-9088. In order to allow the
commission sufficient time to review and evaluate your
written comments, please submit your comments to Robert
Upton at the above address, no later than the close of
business on December 1 , 1995.
Fiscal Note: This Rule does not affea the expenditures or
revenues of state or local government funds.
SECTION .0300 - EXAMINATION AND
LICENSING PROCEDURES
.0307 CONTINUING EDUCATION AS A
CONDITION OF ANNUAL RENEWAL
(a) In order for a licensee to qualify for license renewal
as a Landscape Architect in North Carolina, the licensee
must have completed 30 JO contact hours of continuing
education witliin the previous year, t»'o yoars, or be granted
an exception by the Board for reasons of hardship. Such
continuing education shall be obtained by active participation
in courses, seminars, sessions or programs approved by the
Board.
(b) To be acceptable for credit toward this requirement,
all courses, seminars, sessions or programs shall first be
submitted to a five member Advisory Committee of North
Carolina licensed Landscape Architects appointed by the
Chairman of the Board with the advice and consent of the
Board. The Continuing Education Advisory Committee
shall recommend any course, seminar, session or program
for continuing education credit to the Board that the Advi-
sory Committee finds to meet the criteria in Paragraph
(b)(l)(2) of this Rule. Advisory Committee members shall
be reimbursed per diem and travel exj>enses for official
meetings at rates equivalent to rates allowed for Board
members. Advisory Committee members shall serve at the
discretion of the Board.
(1) Each course, seminar, session or program to be
recommended for approval by the Board shall,
in the opinion of at leaot four a majority of the
members of the Advisory Committee, have a
direct relationship to the practice of Landscajje
Architecture as defined in Chapter 89A of the
General Statutes of North Carolina and contain
1583
NORTH CAROLINA REGISTER
November 1, 1995
10:15
PROPOSED RULES
i
elements which will enhance the health, safety
and welfare of the citizens of North Carolina
served by North Carolina licensed Landscape
Architects.
(2) The Continuing Education Advisory Committee
shall meet at least once during each three month
quarter of the year and act on each course,
seminar, session or program properly submitted
for its review. Each program shall be recom-
mended for approval, recommended for disap-
proval or deferred for lack of information.
Programs recommended for approval shall be
accompanied by a brief statement of findings by
the committee of how the program meets the
criteria established by this Rule. Programs
deferred for lack of information shall be de-
ferred only once; and if information is still
lacking when next considered, the program shall
be recommended for disapproval. Programs
may be recommended for pre-approval by the
Advisory Committee before they actually occur.
(c) Documentation of compliance with this Section shall
be by affidavit provided on the application for license
renewal. Erroneous or false information attested to by the
licensee shall be deemed as grounds for denial of license
renewal and possible suspension of license or denial of
consideration for future license reinstatement, at the discre-
tion of the Board.
(d) R e quir e m e nto of thio S e ction for lioonD e r e newal ohall
b e com e e ff e ctiv e for lio e nse r e n e wal on July 1, 1993. The
Continuing Education Advi s ory Committoo shall bo ap
pointed and ready to sor^'o no lator than Juno 1, 19JX).
Twenty contact hours within the previous two years shall be
allowed for license renewals during the period of July J^
1995 to June 30. 1996.
Statutory Authority G.S. 89A-3(c); 89A-5.
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1584
LIST OF RULES CODIFIED
J. he List of Rules Codified is a listing of rules that were filed with OAH in the month indicated.
Key:
Citation
= Title, Chapter, Subchapter and Rule(s)
AD
= Adopt
AM
= Amend
RP
= Repeal
With Chgs
= Final text differs from proposed text
Corr
— Typographical errors or changes that requires no rulemaking
Eff. Date
= Date rule becomes effective
Temp. Expires
= Rule was filed as a temporary rule and expires on this date or 180 days
NORTH CAROLINA ADMINISTRATIVE CODE
[TLE
DEPARTMENT
5
Correction
10
Human Resources
12
Justice
13
Secretary of State
15A
Environment, Health,
and Natural Resources
19A
Transportation
SEPTEMBER 95
TITLE
DEPARTMENT
21
Occupational Licensing Boards
2 - Architecture
32 - Medical Examiners
46 - Pharmacy
48 - Physical Therapy Examiners
54 - Practicing Psychologists
60 - Refrigeration Examiners
24
Independent Agencies
5 - State Health Purchasing Alliance
25
State Personnel
Citation
AD
AM
RP
With
Chgs
Corr
Eff.
Date
Temp.
Expires
5 NCAC 2B .0100
/
10 NCAC 3U .0602
/
268 .0110
/
/
10/01/95
26H .0212 - .0213
/
09/15/95
180 DAYS
.0213
/
09/29/95
180 DAYS
423 .1209
/
10/01/95
180 DAYS
42C .2010
/
10/01/95
180 DAYS
42D .1409
/
10/01/95
180 DAYS
12 NCAC 4E .0104
/
/
10/01/95
11 .0210
/
10/01/95
13 NCAC 7F .0101
/
09/06/95
.0201
y
09/06/95
1585
NORTH CAROLINA REGISTER
November 1, 1995
10:15
LIST OF RULES CODIFIED
Citation
AD
AM
RP
With
Chgs
Corr
Eff.
Date
Temp.
Expires
13 NCAC 7F .0501
•
09/06/95
15A NCAC 2B .0201
•
10/01/95
.0211 - .0212
•
•
10/01/95
.0214 - .0216
/
/
10/01/95
.0218- .0219
/
/
10/01/95
.0220 - .0228
•
•
10/01/95
4A .0001
•
10/01/95
.0005
/
/
10/01/95
.0016
/
/
10/01/95
.0020
/
/
10/01/95
.0029 - .0030
/
10/01/95
4C .0007 - .0008
/
10/01/95
.0010
/
10/01/95
4D .0002
/
10/01/95
.0003
/
10/01/95
13B .0101
/
/
10/01/95
.0103
•
10/01/95
.0503
/
/
10/01/95
.0802 - .0814
/
10/01/95
.0815
/
10/01/95
.0816 - .0817
/
/
10/01/95
.0818
/
10/01/95
.0819 - .0822
/
/
10/01/95
.0823 - .0824
/
10/01/95
.0825 - .0826
/
/
10/01/95
.0827 - .0829
•
10/01/95
ISA .2508
/
01/01/96
.2510 - .2511
/
/
01/01/96
.2516 - .2518
/
/
01/01/96
.2519
/
01/01/96
.2521
/
/
01/01/96
.2522 - .2524
/
01/01/96
.2526
/
/
01/01/96
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1586
LIST OF RULES CODIFIED
■
Citation
AD
AM
RP
With
Chgs
Corr
Eff.
Date
Temp.
Expires
15A
NCAC 18A
.2528
/
/
01/01/96
^
.2529 - .2530
/
01/01/96
f
.2531 - .2532
/
/
01/01/96
.2533 - .2534
/
01/01/96
.2535
/
/
01/01/96
.2537
/
/
01/01/96
.2540 - .2542
/
01/01/96
19A
.0401
/
10/01/95
.0406
/
10/01/95
.0502
/
10/01/95
24A
.0404
/
10/01/95
I9A
NCAC 2D
.0801
/
10/01/95
21
NCAC 2
.0206
/
/
10/01/95
.0303
/
/
10/01/95
32H
.0506
/
/
07/01/96
46
.2601
/
/
10/01/95
.1603 - .1605
/
i
.1608
/
f
.1610
/
.2102
/
.2109
/
.2504
/
.2603 - .2606
/
48D
.0006
/
10/01/95
.0008
/
10/01/95
.0011
/
/
10/01/95
48E
.0110
/
/
10/01/95
48F
.0002
/
/
10/01/95
48G
.0501 - .0503
/
10/01/95
.0504
/
/
10/01/95
<
.0505 - .0506
/
10/01/95
.0507
/
/
10/01/95
.0508
/
10/01/95
1
i557
NORTH CAROLINA REGISTER
November 1, 1995
10:15
^
LIST OF RULES CODIFIED
Citation
AD
AM
RP
With
Chgs
Corr
Eff.
Date
Temp.
Expires
21
NCAC 48G
.0509
/
•
10/01/95
.0510 - .0513
/
10/01/95
.0514
/
/
10/01/95
.0515 - .0516
/
10/01/95
.0601
•
/
10/01/95
48H
.0104
•
10/01/95
.0701
/
/
10/01/95
.0702
/
10/01/95
.0703 - .0704
/
/
10/01/95
54
.1602
/
10/01/95
.1702
/
10/01/95
60
.0103
/
10/01/95
24
NCAC 5
.0419
•
/
10/01/95
25
NCAC ID
.0509
/
/
10/01/95
IE
.1402 - .1404
/
•
10/01/95
.1405
/
10/01/95
.1406 - .1408
/
/
10/01/95
.1409
/
10/01/95
.1410 - .1411
/
/
10/01/95
IJ
.0604 - .0605
/
/
10/01/95
.0606
/
10/01/95
.0608
/
/
10/01/95
.0610 - .0612
/
/
10/01/95
.0613 - .0615
/
/
10/01/95
10:15
NORTH CAROLINA REGISTER
November 1, 1995
1588
RRC OBJECTIONS
1 he Rules Review Commission (RRC) objected to the following rules in accordance with G.S. 150B-21.9(a}. State
agencies are required to respond to RRC as provided in G.S. I50B-21. 12(a).
ENVIRONMENT, HEALTH, AND NATURAL RESOURCES
Environmental Health
15 A NCAC ISA .2509 - Plan Review and Approval
Rule Withdrawn by Agency
15A NCAC ISA .2531 - Wading Pools
Agency Revised Rule
15A NCAC ISA .2531 - Spas and Hot Tubs
Agency Revised Rule
Environmental Management
15 A NCAC 2B .0212 - Fresh Surface Water Quality Standards for Class WS-I Waters
Agency Revised Rule
15A NCAC 2B .0214 - Fresh Surface Water Quality Standards for Class WS-II Waters
Agency Revised Rule
15A NCAC 2B .0215 - Fresh Surface Water Quality Standards for Class WS-lII Waters
Agency Revised Rule
15 A NCAC 2B .0219 - Fresh Surface Water Quality Standards for Class B Waters
Agency Revised Rule
15A NCAC 2B .0222 - Tidal Salt Water Quality Standards for Class SB Waters
Agency Revised Rule
15A NCAC 2B .0224 - High Quality Waters
Agency Revised Rule
Health: Epidemiology
15A NCAC 19H .0702 - Research Requests
Rule Withdrawn by Agency
Sedimentation Control
15A NCAC 4B .0020 - Inspections and Investigations
Agency Revised Rule
Solid Waste Management
15A NCAC 13B .0815 - Incorporation by Reference
Agency Revised Rule
15A NCAC 13B .0817 - Septage Management Firm Permits
Agency Re\'ised Rule
15A NCAC 13B .0819 - Septage Land Application Site Permits
Agency Revised Rule
15A NCAC 13B .0820 - Septage Detention and Treatment Facility Permits
Agency Revised Rule
15A NCAC 13B .0821 - Location of Septage Land Application Sites
Agency Revised Rule
15A NCAC 13B .0822 - Managem£nt of Septage Land Application Sites
Agency Re\'ised Rule
15 A NCAC 13B .0825 - Standards for Septage Treatment and Detention Facilities
Agency Revised Rule
09/21/95
RRC Objeaion
09/21/95
Obj. Removed
09/21/95
RRC Objection
09/21/95
Obj. Removed
09/21/95
RRC Objection
09/21/95
Obj. Removed
09/21/95
RRC Objeaion
09/21/95
Obj. Removed
09/21/95
RRC Objection
09/21/95
Obj. Removed
09/21/95
RRC Objection
09/21/95
Obj. Removed
09/21/95
RRC Objeaion
09/21/95
Obj. Removed
09/21/95
RRC Objection
09/21/95
Obj. Removed
09/21/95
RRC Objection
Obj. Removed
09/21/95
09/21/95
09/21/95
RRC Objeaion
09/21/95
Obj. Removed
09/21/95
RRC Objection
09/21/95
Obj. Removed
09/21/95
RRC Objection
09/21/95
Obj. Removed
09/21/95
RRC Objeaion
09/21/95
Obj. Removed
09/21/95
RRC Objection
09/21/95
Obj. Removed
09/21/95
RRC Objeaion
09/21/95
Obj. Removed
09/21/95
RRC Objeaion
09/21/95
Obj. Removed
09/21/95
1589
NORTH CAROLINA REGISTER
November 1, 1995
10:15
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